Huawei will sell the business of submarine internet cables amid a conflict with US authorities

Journalists believe the company cannot bargain because of espionage charges.

Huawei plans to sell the direction of the submarine telecom cables, which has been engaged in the past 10 years. The buyer will be another Chinese company, the price of the transaction has not been disclosed. This was reported by Reuters, referring to the documents submitted to the Shanghai Stock Exchange.

According to journalists of the Financial Times, the reason for selling the business was the accusation of Huawei of spying for China by the United States. This led to the fact that Huawei Marine Systems Co Ltd “has become increasingly difficult to win contracts.” A similar opinion is shared by journalists and Reuters.

According to the Huawei financial report, in 2018 the net profit from the submarine cable business was $ 16 million, with revenue of $ 57 million. The company decided to sell the Chinese business Hengtong Optic-Electric Co Ltd, which is one of the largest players in the submarine cable market in China and the world.

The buyer will pay for the 51% share of Huawei in the enterprise in cash and own shares. The parties did not disclose the amount of the transaction, and Huawei could not promptly respond to the Reuters request.

Huawei began laying underwater cables in 2009. During this time, the company’s subsidiary conducted 90 projects around the world and built 50,000 kilometers of cables, including a 6,000-kilometer cable between southern and northern Africa, which they completed in September 2018.

For the first time, the risks of using Huawei cables became known in March 2019. Then The Wall Street Journal reported that the US authorities consider them unsafe and are suspected of transferring data to the Chinese government.

The conflict between Huawei and the US authorities escalated in May 2019, when the US Department of Commerce put the company on the “black list”. After that, American firms began to refuse to work with it , including Google, IBM, Qualcomm and more.

On May 21, US authorities extended the Huawei license for 90 days. Two days later, it became known that the company could lose its own Kirin processors, due to the fact that their architecture was invented in America.

In addition, Huawei was excluded from the SD association, so it will not be able to use memory cards in their devices. However, this will slightly harm the company, as it has been developing its own standard for several years.

On June 1, The South China Morning Post, citing sources, said that Foxconn, a contractor for assembling Huawei smartphones, suspended several production lines due to a reduction in the company’s order. The interlocutor of the publication noted that this may be a temporary phenomenon, and manufacturers often adjust orders.

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