Huawei is retreating from a key market

Huawei is retreating from a key market
Troubles continue to mount for Huawei as India joins the US and Europe in banning Chinese firms over espionage fears. The company has reportedly slashed its revenue target in India by 50 percent for the current year and is also laying off up to 70 percent of its staff in the country. The manufacturer will apparently be retaining employees in research and development and the Global Service Centre.

Tensions between the two countries have been rising ever since a border clash resulted in the death of 20 Indian soldiers. Consumer sentiment has turned sour against China and there all calls to boycott goods such as smartphones originating from the country. 

Another setback for Huawei's 5G plans

The Indian government has already stopped state-run carriers from getting equipment from Huawei and ZTE and is seemingly requesting private telecoms to do the same. They have supposedly been requested to phase out Chinese equipment gradually so that consumer services are not disrupted. 

Reliance Jio, the country's largest mobile network, sourced components from Samsung for its 4G network. The other two dominant companies, Bharti Airtel and Vodafone Idea, got their equipment from various vendors including Huawei. According to research, the Chinese giant's gear makes up 40 percent of Vodafone Idea’s network and around 33 percent of Bharti Airtel’s existing network. 

All of these telecom companies have submitted applications to carry out 5G tests with different manufacturers including Huawei.

Whether Huawei will make the cut remains to be seen, but it seems highly unlikely. According to an insider, the company currently has no new projects in India and there is no clarity on any new business from carriers. 

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Huawei was earlier expecting India to generate nearly $700-800 million in revenue in 2020, a far cry from sales of $1.2 billion posted in 2017. Now, it has revised those expectations and is only forecasting sales of around $350-500 million.

As grim as the situation may sound, experts believe it would be an uphill task for India to disengage from China as the later's influence in investments, trade, and technology has grown significantly over the years. Per an estimate, Huawei's India unit employs nearly 700 people and this figure doesn't include the hundreds of people working for the company through third-party firms. 

That said, telecommunication is one sector where alternatives are available and thus Huawei will probably not be included in India's 5G rollout.

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