Chinese telecommunications giant Huawei is planning to fire hundreds of its employees in the U.S., people familiar with the plans said, adding that the massive layoff will affect employees at Futurewei Technologies, Huawei’s U.S.-based research and development subsidiary.
Another person said that the company’s Chinese workers were offered the opportunity to return home and stay with the company. Futurewei Technologies employs around 850 people all across the country.
The Wall Street Journal writes that after the Commerce Department’s May 16 decision to ban Huawei from getting U.S.-sourced technology without a license, the subsidiary faced restrictions in communicating with Huawei’s home offices in China.
The company has already notified some of its employees of the layoff, the latest setback for the Chinese telecom giant. The United States previously blacklisted Huawei, making it considerably more difficult for it to buy critical U.S. components and software for its products. Huawei is a huge consumer of American technology, with $11 billion worth of U.S. technology purchased last year alone.
The company may see a reprieve soon, however, if President Donald Trump makes good on his promise, which he made during the G20 summit in Japan, to allow some tech exports to Huawei to continue. The issue bears great significance for any future trade deal between China and the U.S.
Last week, Commerce Secretary Wilbur Ross said the U.S. would start granting export licenses to Huawei suppliers provided that their sales are not a risk to national security. The United States has accused Huawei of spying on behalf of the Chinese government, an allegation the telecom company vehemently denies.
The 1,500 employees Huawei has in the U.S. mostly handle equipment sales to rural wireless carriers across the country or conduct research at Futurewei. However, the Commerce Department Huawei’s entity listing labels the subsidiary’s research and development efforts as U.S.-sourced technology, making it more difficult for it to perform its operations.
Huawei is highly reliant on American chips and other technology and its blacklisting by the U.S. poses a serious risk to the company. According to the company’s founder, it could cost Huawei $30 billion in lost revenue over the next two years.