Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well, Wawei
Speaker 1: has battled for survival since the US bartet from buying
Speaker 1: an array of imported components from Qualcom's most advanced chips
Speaker 1: to Alphabets Android system two years ago. Companies looking for
Speaker 1: growth and emerging businesses such as wireless communications, project products
Speaker 1: that are using coal mines and smart cockpit solutions for
Speaker 1: electric vehicles. They're really looking for growth in a lot
Speaker 1: of areas. We're very pleased to have back with us.
Speaker 1: Andy Purty, chief security officer at Huawei Technologies USA. Andy
Speaker 1: joining us once again via zoom from College Park, Maryland. Andy,
Speaker 1: how are you? But actually I'm in San Francisco conference.
Speaker 1: Good to have you with us at in San Francisco.
Speaker 1: Remind me why are you there the rs A Security
Speaker 1: conferences this week? Perfect? There it is. What are the
Speaker 1: big topics that are at the RSA Security Conference? Now
Speaker 1: that's back in person. There's a lot about zero trust,
Speaker 1: technological innovation, cypelucurity, risk, cloud. I mean, it's just everything
Speaker 1: is covered. Well, I've been at that event. Yeah, it's
Speaker 1: really fascinating. I do feel like, uh Andy, certainly when
Speaker 1: we talk with CEOs of companies, and we've we've found
Speaker 1: this when we were at at Milkin on the West Coast,
Speaker 1: is that when it comes to if companies have to
Speaker 1: rain in spending at all, depending on the economic environment,
Speaker 1: they're not necessarily going to do it when it comes
Speaker 1: to tech, and certainly not when it's tech related to security.
Speaker 1: Uh the spend is on. Tell me a little bit
Speaker 1: about your outlook. Um, we know that last time around
Speaker 1: in terms of earnings, it was a little tricky for
Speaker 1: you guys. What are you seeing. I think your profit
Speaker 1: was down about sixty seven. I know a lot of
Speaker 1: it has to do with US sanctions against you guys.
Speaker 1: What's what's business look like right now? And what's the outlook? Well, well,
Speaker 1: certain of the components that we haven't been able to
Speaker 1: get have dramatically hurt our five G mobile phone business.
Speaker 1: But in the other areas we have been holding our
Speaker 1: own in terms of our five G networks. Our enterprise
Speaker 1: business has done tremendously well with digitalization that's really transforming business.
Speaker 1: We've been selected by two hundred and sixty seven of
Speaker 1: the global Fortune five companies to do their transformation, and
Speaker 1: we've had great success in terms of what we call
Speaker 1: the seamless AI life experience with mobile devices, wireless handhelds,
Speaker 1: those kinds of things. We're making a big difference, and frankly,
Speaker 1: it's given the challenge of moving forward. We've made a
Speaker 1: gigantic investment in R and D, up from ten percent
Speaker 1: of revenue to we spent twenty two billion last year
Speaker 1: in R and D. We're making great progress with it.
Speaker 1: How much would you characterize these sanctions placed by the
Speaker 1: United States are affecting the business? How much is it
Speaker 1: holding back from more companies in the essen in the
Speaker 1: fortune adopting your technology. Well, it's hard to it's hard
Speaker 1: to say. Certainly. Our global revenues, for one, as you know,
Speaker 1: we're down like which is a dramatic cut down to
Speaker 1: just under a hundred billion dollars um. We have so
Speaker 1: many UH countries in the world that are interested in
Speaker 1: doing business with, so many companies that want to do
Speaker 1: business with our five g is is all over the world,
Speaker 1: and we're having a great user experience. And frankly, what
Speaker 1: I'm encouraged by is that we are so open to
Speaker 1: collaborating with whoever, including the US government, private companies on
Speaker 1: some of this R and D that's going to be
Speaker 1: necessary to move from five G to five point five G.
Speaker 1: The connectivity that's going to be necessary will have to
Speaker 1: grow a hundredfold every year. So we have to push
Speaker 1: some of the scientific theories, and we'd love to collaborate
Speaker 1: with the experts around the world to do that well.
Speaker 1: And what's interesting you talk about five G, but I
Speaker 1: have conversation after conversation about five G hasn't lived up
Speaker 1: to its expectations. We've done some reported here at Bloomberg. Uh,
Speaker 1: what signs do you have that that maybe is changing
Speaker 1: well in certain parts of the world where you have
Speaker 1: true five G Because as you know, it's not just
Speaker 1: about speed, it's also about latency, the lag time. It's
Speaker 1: also about the number of connections. So moving toward an
Speaker 1: intelligent world, the five G enabled technologies are happening in
Speaker 1: great order in several countries of the world. So we're
Speaker 1: hopeing that we can share the experience, not that we
Speaker 1: would necessarily do the business in the United States, but
Speaker 1: make sure the American sectors understand that these technologies are
Speaker 1: available now and it's going to really help transform the companies.
Speaker 1: That's going to help their competitiveness, and it's going to
Speaker 1: help the citizens of those countries to get involved in it.
Speaker 1: What hope do you have that President Biden, and let's
Speaker 1: get to kind of the elephant in the living room,
Speaker 1: that he will review those tariffs. He's talked about reviewing
Speaker 1: the tariffs imposed um on imports from China. That something
Speaker 1: will change. And I'm curious about the conversations that you
Speaker 1: are having with folks in Washington that anything significantly will
Speaker 1: change on this front. Well, frankly, we are such a
Speaker 1: small player in this and the business even at its
Speaker 1: peak that we did in the United States was was
Speaker 1: not a material thing. So when you look at the
Speaker 1: factors that are taking place with the Russian invasion of Ukraine, UH, COVID,
Speaker 1: other factors, you see the global community is concerned about
Speaker 1: changes in globalization because I think it was the I
Speaker 1: m F has said that global is nation in the
Speaker 1: last thirty years raised over a billion people out of poverty,
Speaker 1: and we just hit uh Washington Propost story said that
Speaker 1: we hit a record of twenty eight point five billion
Speaker 1: of goods traded last year. So we're a small player.
Speaker 1: Globalization that has brought great benefits to the global community
Speaker 1: has to be careful. Let's not throw the baby out
Speaker 1: with the bathward. We have to reshape globalization and and
Speaker 1: so we're just a small player. We want to share
Speaker 1: information and collaborate, particularly on things like cybersecurity and innovation
Speaker 1: and some of these hard scientific problems. But we're just
Speaker 1: open and we just want to try to do business
Speaker 1: where where we're welcome, And we're welcoming an awful lot
Speaker 1: of places. But do you feel like, Okay, you're welcoming
Speaker 1: a lot of places. Do you anticipate that you'll be
Speaker 1: welcome back, small player or not in the US market
Speaker 1: anytime soon. No, I certainly don't think we'll be welcomed
Speaker 1: back in the US anytime soon. Uh. I think in
Speaker 1: the long term, and I'm encouraged that the cybersecurity efforts
Speaker 1: of the United States government and the private sector and
Speaker 1: partnership have grown dramatically. It's recognized that, as I think
Speaker 1: we talked about before, there's no such thing as trusted suppliers.
Speaker 1: That bad guys can hacken everybody. So one of the
Speaker 1: things we're seeing here at the RSA conferences the efforts
Speaker 1: to raise security to raise assurance, to implement the zero
Speaker 1: trust kind of principles that President I've mentioned in the
Speaker 1: Cybersecurity Executive Order about a year and a half ago. Now,
Speaker 1: those are the kinds of things that are necessary to
Speaker 1: make sure these technologies, as we come to get the
Speaker 1: benefits of them, will be dependent on them, and we've
Speaker 1: got to make sure they're going to be resilient. They're
Speaker 1: gonna be up and running when we need them. And
Speaker 1: that's going to continue to require the public private partnership
Speaker 1: and greater global cooperation for standards and independent testing of
Speaker 1: key components of everybody's products. And we're supporting that around
Speaker 1: the world. To what extent are you concerned that the
Speaker 1: way that the United States has essentially blacklisted Wahwei spreads
Speaker 1: to other countries at this point, Well, frankly, I'm not
Speaker 1: concerned about it. You know, I've been to twenty six
Speaker 1: countries for Whahwei, although I haven't traveled since uh March
Speaker 1: of um, we're still doing business in an awful lot
Speaker 1: of places. I mean, the fact I mentioned earlier that
Speaker 1: two hundred and sixty seven the Global Fortune companies have
Speaker 1: turned to us for their transformation the Asia Pacific. All
Speaker 1: these these countries are very interested in in green energy,
Speaker 1: and we're really becoming a leader in green energy, partnering
Speaker 1: with folks to help develop greater capabilities to create the
Speaker 1: green energy, to transmit it, and to store it. And
Speaker 1: we're gonna get an awful lot of business in the
Speaker 1: in the Asia Pacific realm, and I think increasingly in Europe.
Speaker 1: So there's it's a big world out there, and we've
Speaker 1: got plenty of business and do But it can be
Speaker 1: Whawei can be just fine in a world without the
Speaker 1: United States. I mean to be fair, there is a
Speaker 1: ton of equipment here in the United States that is
Speaker 1: running on Huawei parts and other Chinese companies because they
Speaker 1: were already here before the ban um went into effect,
Speaker 1: the US ban against Chinese made components. But can Wahwei
Speaker 1: have a future you talk about, you know, the global
Speaker 1: reach that you guys have in globalization, you know, is
Speaker 1: the U S market crucial to this company going forward? Actually,
Speaker 1: as I said, we have not had significant revenues in
Speaker 1: the United States compared to our global revenues. Yes, we
Speaker 1: can continue to do fine without any revenue from the US.
Speaker 1: But when you talk about globalization, the issue of the
Speaker 1: sanctions limiting the ability of the American semiconductor industries to
Speaker 1: sell the WAWAEY. Now that has tremendous benefits for the
Speaker 1: American worker because when we were at twelve billion a
Speaker 1: year in those purchases, that supports about forty tho American jobs.
Speaker 1: So we hope at some point there will be a
Speaker 1: recognition and there are discussions on some of the tariff
Speaker 1: issues you solve the editorials in the Wall Street Journal
Speaker 1: and Washington Post recently trying to get folks to say,
Speaker 1: let's look dispassionately at tariffs. Let's not put tariffs on
Speaker 1: Chinese goods if we can't get goods from somewhere else.
Speaker 1: We have to look at what's in the best interest
Speaker 1: in the United States. And I think that's a great standard,
Speaker 1: and I hope over time that that will be something
Speaker 1: that the US government will consider. But frankly, we're seeing
Speaker 1: a change in the global supply chain of semiconductors. The
Speaker 1: head of Intel was asked on TV last week when
Speaker 1: the U s will be independent and semiconductors. He said never.
Speaker 1: And what he said was, and we see the coming
Speaker 1: out of Europe that there will be a transformation in
Speaker 1: the semiconductor market globally Asia, US and Europe, and it
Speaker 1: will be Europe, US and fifty percent Asia. So we're
Speaker 1: going to see a transfer a globalization UH. And we
Speaker 1: have reconstructed our product portfolio and our path forward. So
Speaker 1: if we're not able to get those chips from the
Speaker 1: United States, we're still going to be fine, and we're
Speaker 1: in survival mode. But but we're going to survive in
Speaker 1: survival mode, but going to survive. Andy, I want to
Speaker 1: talk a little bit. You mentioned the supply chain, and
Speaker 1: I'm wondering what you can tell us about the global
Speaker 1: supply chain right now and what you're seeing in terms
Speaker 1: of components And have you seen the constraints that we've
Speaker 1: all experienced over the last couple of years and particularly
Speaker 1: over the last fourteen months at this point, are you
Speaker 1: starting to see those ease Well, UM, not in a
Speaker 1: substantial way. But what we've been working on is UH
Speaker 1: to diversify our suppli shot. We've also adjusted the products
Speaker 1: that we make to make sure that we have components
Speaker 1: that we know we can that we can get and
Speaker 1: we're pursuing those products shortening the life cycle of other products.
Speaker 1: So the UH and the greater research that we're doing
Speaker 1: in in computing UH, in UH, the power supplies, UH
Speaker 1: in the individual digitalization of sectors. That we're going to
Speaker 1: find new business in those areas, and we're going to
Speaker 1: help inform those that are going to make chips around
Speaker 1: the world that some of the things that we've learned
Speaker 1: we're going to be sharing with them, and so that
Speaker 1: there there will be more supplies from around the world. Generally,
Speaker 1: we've diversified our supply chain for those things we can get,
Speaker 1: and I think that's what we're gonna see around world.
Speaker 1: It's got to be greater diversification so that a company
Speaker 1: or government can know they'll be able to get it
Speaker 1: from here, that they'll get it from there, and probably
Speaker 1: need some capability in the United States so that if
Speaker 1: really bad stuff happens in the short term and something's essential,
Speaker 1: then we'll have it. But look at something like the
Speaker 1: baby formula, Right, you can't just have everything domestic and
Speaker 1: think that that you're going to have what you need
Speaker 1: when bad things happen. Right, you have to have kind
Speaker 1: of overarching approach and and still somewhat of a refocused,
Speaker 1: reshaped global supply chain. Yeah, it's certainly something that I
Speaker 1: talked about earlier in that panel, the Bloomberg Live Panel,
Speaker 1: when it comes to near shoring, on shoring, I mean
Speaker 1: people are making sure they've got good backup systems. Uh.
Speaker 1: Any party, Thank you so much. Chief security officer at
Speaker 1: Wawei Technologies USA, on the phone from San Francisco,