Huawei in spotlight as it tackles tech curbs (2)

R&D spending rises

To cope with curbs, Huawei said earlier that its R&D spending grew 29.8 percent to 131.7 billion yuan ($19.3 billion) in 2019, while inventories of components surged 73.4 percent on a yearly basis.

"Such a time window can give Huawei some wiggle room," said Jiang Junmu, chief writer at Chinese telecom industry news website c114.

The latest restrictions are unlikely to pose an existential threat to Huawei, which had global sales revenue of 454 billion yuan in the first half, despite potentially profound disruptions, Jiang said.

Also, the US government is facing mounting pressure from the country's own semiconductor association and chip companies. This may force it to leave open the possibility of reprieve for certain US suppliers, experts said.

"These broad restrictions on commercial chip sales will bring significant disruption to the US semiconductor industry," said John Neuffer, president and CEO of the US Semiconductor Industry Association, which represents 95 percent of US semiconductor companies.

Some experts said that Washington may allow certain US suppliers, such as Qualcomm, to continue selling chips to Huawei after the November presidential election.

Huawei, however, is already feeling the pain of tightened curbs. Anticipating that Huawei would face a shortage of chips, local rivals such as Oppo and Xiaomi Corp have raised their sales targets.

"The market is fiercely competitive. One company's crisis offers opportunities to other players," said Fu Liang, an independent analyst who has followed the industry for over a decade.

Liu Chang, a software employee at Huawei, said, "The road ahead is tougher, but my colleagues and I are determined to hold our heads up to meet the challenges."

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