Huawei is reportedly selling off its undersea cable operations, and reportedly shrinking another, by reducing smartphone production orders with supplier Foxconn.
Huawei Marine Systems, in which Huawei holds a 51 percent stake, lays undersea fiber optic cables between continents in much the same way that Microsoft, Facebook, and Google have been doing. It was established in 2009 and has laid more than 50,000km of cable across 90 projects, according to its website.
However due to the Huawei’s reputation as an alleged Chinese spying facilitator has made it increasingly difficult for Huawei Marine Systems to win contracts, as the FT reports. That reports cites Fergus Hanson from the International Cyber Policy Centre at the Australian Strategic Policy Institute, who says “It’s becoming a more difficult environment when trying to negotiate deals to build cables because [Huawei] is so much in the spotlight.”
Hengtong Optic-Electric, another Chinese company, is buying Huawei’s share of the submarine cable operation, and it made the planned sale official in a filing to the Shanghai Stock Exchange. The price of the transaction has not been publicized.
According to a report from the South China Morning Post indicates that Foxconn, leading production and assembly partner to many smartphone makers, has stopped several production lines for Huawei phones in recent days as the Shenzhen company reduced orders for new phones.
The SCMP goes on to report that Foxconn had apparently been hiring new staff earlier in the year to help it cope with Huawei’s growing demand, and Huawei was indeed on a path to becoming the world’s biggest smartphone vendor by the end of 2019. Reaching that goal has now been substantially delayed by the US ban setback and may even become impossible, depending on how long Huawei’s enforced estrangement from Google and other US partners continues.