To combat the US' imposed restrictions and sanctions against it, Chinese telecommunications manufacturing giant Huawei Technologies is now looking to make a significant shift in its supply chain. The company is reportedly eyeing suppliers in Japan to offset its inability to purchase components from US companies such as Qualcomm and Intel.
Based on the reports of Huawei's plans, Japan could very well overtake the United States as Huawei's largest component supplier. Since the US government had deemed the company a potential national security threat and placed it on its trade blacklist, Huawei has been scrambling to form new partnerships with global suppliers outside of the United States.
The planned shift in its global supply chain is apparently aimed at reducing its reliance on US companies and technologies, thus ensuring its sustainability. The move has been deemed by the company as a a necessary one, even if China does manage to close an amicable trade deal with the United States.
Huawei Chairman Liang Hua mentioned in an interview in Japan that the company has made substantial component orders from a number of Japanese suppliers. According to the executive Huawei has so far ordered components worth more than $10 billion from Japanese suppliers this year. This represents a 50 percent increase when compared to the previous year.
Hua stated that Japanese component manufacturers have proven themselves to be a good source for the company. Hua explained that Japanese companies have shown "various strengths" in the manufacturing of components used in Huawei's telecommunication base stations and smartphones. The executive also hinted that there could be a significant increase in the company's orders of Japan-made components in the coming years.
Apart from Japan, Huawei is reportedly also looking to tap into European suppliers for its component requirements. Huawei's deputy chairman, Hu Houkun, mentioned in an interview in France last month that the company has formed partnerships with over 3,500 suppliers in Europe. The Chinese tech firm revealed that it plans to purchase close to $40 billion worth of components from these suppliers over the next five years.
Both Japan and Europe could stand to benefit if Huawei does shift its orders from the US. Last year, Huawei bought various components worth an estimated $11 billion from US suppliers. That number is expected to significantly drop this year, given the US government's imposed trade ban on the company in May.
The shift will translate into a significant loss for US companies, which have been forced to end their dealings with the Chinese firm by the government. Huawei had repeatedly stated that it is still an advocate for globalization, calling the US to end its ban.
