Chinese telecom giant Huawei has announced it is cutting 600 jobs at its U.S. research unit Futurewei after the U.S. put the company on a commerce blacklist.
Huawei said in a statement on Tuesday that the layoffs were “due to the curtailment of business operations caused by the U.S.”.
“Decisions like this are never easy to make,” the company said, adding that those affected would receive severance packages.
Futurewei, which originally had around 1,500 employees and an operating cost of 510 million dollars in 2018, will continue to operate.
This is the first layoff announcement by Huawei since the U.S. Department of Commerce blacklisted the company in May.
Huawei founder Ren Zhengfei last month cut the company’s revenue forecast this year by 30 billion dollars due to the blacklisting.
But he said that the company would “not reduce its headcount substantially”.
On May 15, 2019, U.S. President Donald Trump declared a national emergency, signing an executive order banning U.S. companies and government agencies from using telecommunications equipment that pose a risk to national security.
While the initial announcement did not mention Huawei by name, members of congress did not hesitate to reference the massive Chinese company directly.
Soon after Trump’s announcement, the U.S. Commerce Department added Huawei to what is referred to as the Entity List.
Covering everything from businesses to individuals, placement on the list essentially bans an entity from doing business in the U.S.
There is little doubt the initial executive order was primarily geared at restricting Huawei’s ability to do business in the U.S.
Within days of the government action, the repercussion for Huawei began to hit hard.
Google quickly ended its business dealings with the Chinese company, meaning Huawei would have no early access to the Android ecosystem, ultimately locking its smartphones out of the Google Play Store and apps such as Gmail and Maps.
Intel, Broadcom, and Qualcomm all reportedly ceased business with Huawei, cutting off the supply of hardware fundamental to several of the company’s major products.
These dramatic events were the culmination of years of suspicion surrounding Huawei’s ties to the Chinese government.
For more than a decade the company has been accused by governments around the world of working with Chinese national spy agencies.
But Huawei and Beijing have rejected the accusations.
