Fri, Dec 14, 2018 - Page 10 News List

Huawei freezes purchases from Japanese supplier

WORD ON THE GROUND:Yaskawa president Hiroshi Ogasawara said he has heard that Huawei has placed many of its capex deals on hold and has been ‘turned upside down’


Huawei Technologies Co chief financial officer Meng Wanzhou arrives at a parole office with a security guard in Vancouver, British Columbia, on Wednesday.

Photo: AP

The surprise arrest of Huawei Technologies Co (華為) chief financial officer Meng Wanzhou (孟晚舟) is about to affect one of the Chinese company’s suppliers in Japan.

Yaskawa Electric Corp, which supplies industrial robots for Huawei’s smartphone and telecom gear factories, saw all orders for its machines put on hold after the arrest, Yaskawa president Hiroshi Ogasawara said in an interview on Wednesday.

Of Yaskawa’s ¥448.5 billion (US$4 billion) in revenue for the fiscal year that ended in February, 23 percent came from China.

“My people on the ground in China say that Huawei is turned upside down internally,” Ogasawara said. “All kinds of capex deals are temporarily on hold as they figure things out.”

Huawei declined to comment.

Meng was arrested in Vancouver at the request of US authorities for allegedly breaching sanctions related to selling technology to Iran. While her detention has become an international incident, this is the first indication that it is beginning to affect Huawei’s operations.

The arrest has further undermined the international standing of the company, which was already under suspicion in the West because of its ties to the Chinese government.

Separately, the Japanese media earlier this week reported that the country’s top three carriers — NTT Docomo Inc, SoftBank Group Corp and KDDI Corp — would ban telecommunications equipment by Huawei and ZTE Corp (中興), and France’s Orange SA said it does not plan to work with Huawei to build its 5G mobile network.

The order freeze is making Yaskawa reconsider its outlook on the timing of demand for 5G phones and communications equipment, because Huawei was at the forefront of the technology’s rollout, Ogasawara said.

Yaskawa in October said that it expected memorychip manufacturers to start making capital investments related to 5G in the spring and see a boost in its own machinery orders by early next year.

That outlook is now uncertain, because of the events at Huawei, Ogasawara said.

The Huawei incident and trade tensions with the US are not likely to derail 5G’s rollout in China, he said.

The deployment is driven by China’s national policy and orders for internal demand would make up for any losses due to trade barriers, Ogasawara said.

Yaskawa has three factories in China, all of which make machines for domestic customers.

Global smartphone output is not likely to decline, but capital investment is likely to remain flat until 5G demand kicks in during the second half of next year, Ogasawara said.

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