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'That will leave the U.S. behind': Huawei CEO Ren Zhengfei speaks with Yahoo Finance

Huawei, the tech giant at the center of the U.S.-China trade war, has been under suspicion for its ties to the Chinese government and concerns that its telecom equipment can be used to spy.

Back in 2012, the U.S. banned companies from using Huawei networking gear, and in May 2019 Huawei was blacklisted from U.S. communications networks along with being added to the U.S. Department of Commerce’s Bureau of Industry and Security Entity List. This follows an executive order from President Donald Trump.

Huawei CEO Ren Zhengfei sat down with Yahoo Finance’s Akiko Fujita in an exclusive interview from his company's headquarters in Shenzhen, China. He argued that the U.S. decision to shut out his company is actually a grave mistake that will backfire.

“The U.S. is abandoning 5G,” Ren said. “Even if they have supercomputers and super large-capacity connections, the U.S. might still fall behind because they don't have super-fast connections. All three of these things are indispensable. That’s the reason a new breaking point will appear. That will leave the U.S. behind. Shutting Huawei out today is the start of the U.S. falling behind.”

Huawei CEO Ren Zhengfei speaking with Akiko Fujita of Yahoo Finance.
Huawei CEO Ren Zhengfei speaking with Akiko Fujita of Yahoo Finance.

Below is a translated transcript of the conversation, which has been condensed and edited for clarity.

Akiko Fujita, Yahoo Finance: Let's talk about what played out between the U.S. and China a few weeks ago at the G20 summit, where President Trump and President Xi met. One of the points of discussion between them was to allow for some licenses so American suppliers could begin selling to Huawei again. What shipments have resumed since then?

Ren: I don't think we were fully prepared for being added to the Entity List. So we faced some pressure. However, after we tried to sort out our internal problems, we found that we are fully capable of shaking off our reliance on the U.S. for our core products and depending on ourselves to survive. But we also have many other products that cannot do without U.S. components. So we cut some of these products to reduce the pressure. Over 80,000 members of our technical staff are working hard to fix other “holes” in the development of our company. From what we’re seeing today, we've made pretty good progress.

Read also: Huawei CEO on partnerships with U.S. companies: 'We have to be more cautious"

The remarks made by Trump at the G20 Summit have had no substantial impact on Huawei yet. His remarks indicated the U.S. is no longer trying to strike blindly at Huawei. When they added us to the Entity List, even McDonald's in Mexico stopped selling to us. This suggested that the U.S. had no idea which products were actually not important and whether their supply to Huawei could be continued at that time. Trump's remarks have helped many small and medium-sized enterprises (SMEs) in the U.S. Resuming supply to us has boosted their sales. Of course, his remarks also allowed us to resume production for part of our products. Overall, as long as the U.S. shows a friendly attitude, we will continue to buy components from this country. We believe the world will ultimately collaborate for shared success.

Akiko Fujita, Yahoo Finance: You mentioned some SMEs have resumed shipments, can you tell us which specific companies?

Ren: I am not that clear about the details. To my knowledge, the supply of the vast majority of less critical components has resumed. This is a good thing. It can help some U.S. companies change their business performance. But the U.S. has not made any decisions on the supply of critical components yet. I estimate that they need around two more weeks to make a decision. If they don't make a decision, we will.

Read also: Huawei exec: ‘Google is still trying to supply to Huawei’

Akiko Fujita, Yahoo Finance: What the U.S. Commerce Department has said is if these are components that are readily available, they will grant licenses to supply Huawei, but those that have national security will not. I'm wondering, there's a lot of confusion in the U.S. What is your understanding? What constitutes national security in terms of the components that you take in? Which component is considered a national security risk, therefore not being able to be sold to Huawei?

Ren: I don’t know what the national security concern is to the U.S. We don't have any networks in the U.S., nor do we intend to sell our 5G products there anyway, so there's no way we can pose a threat to the U.S. I think the U.S. is too apprehensive. At the end of the day, collaborating for shared success is the only way forward. The U.S. is the most powerful and the most technologically capable nation in the world. It should have more confidence in its ability to address cybersecurity issues.

Ren Zhengfei's Interview with Yahoo Finance — July 17, 2019
Ren Zhengfei's Interview with Yahoo Finance — July 17, 2019

There's not one individual component that can threaten the national security of the US.

5G is just a tool that helps networks operate faster. It's good for the world. 5G is not an atomic bomb. How has it become a "threat"? Secondly, we have no plans to sell our 5G products to the U.S., so there is no way it’s a threat to the U.S. I think the U.S. is too apprehensive.

Akiko Fujita, Yahoo Finance: I heard you recently say, "The U.S. has helped us in a great way by giving us these difficulties," the implication being that you have been able to accelerate your efforts for increasing self-reliance. I'm wondering if that's the case. What do you see is your future with some of these partners that you have, like Intel, Qualcomm, and Micron in the U.S.?

Ren: If the U.S. companies are allowed to supply us, we will continue to buy from them, even in areas where we have developed our own alternatives. We adopted this approach in the past. Last year, we bought 50 million chipsets from Qualcomm even though we have our own complete chipset portfolio. This year, we could probably make about 270 million phones, and we authorize our consumer business to buy 100 million chipsets from Qualcomm. We can live without Qualcomm, but we are still committed to working with them.

Read also: Huawei sets aggressive goal of 270 million phone shipments despite US ban: Exclusive

Intel is a provider of x86 servers. We also have our TaiShan servers powered by our Kunpeng CPUs. We will redouble our efforts to make our products even better over time. If Intel can continue supplying Huawei to help us maintain our leading position, then we will still buy in huge volumes from them. We hope that Intel's x86 servers will be able to secure a 70% market share in the data communications area. We're only looking to obtain a tiny slice of the market, so that we will not squeeze Intel out. As long as the U.S. is open to Huawei, we will keep purchasing huge amounts of U.S. components, even in areas where we have developed our own alternatives.

Akiko Fujita, Yahoo Finance: And as it stands right now, you are still in this wait-and-see mode because some of these American companies are still waiting for licenses before being able to sell to you. How long can you last without anything from the U.S.?

Ren: If U.S. companies were to stop supplying us altogether, our production would not stop for a single day in the future. Rather, we would ramp up production. But we will face some difficulties because we need to switch product versions. To do that, we need more staff. This year, we have recruited over 6,000 new employees thus far to optimize or replace existing versions. During a version switch, all teams – including R&D, marketing and sales, and delivery – need to deliver products to customers in new ways. This means a bigger workforce and more costs.

There's no lethal risk that threatens Huawei's survival at all. The more advanced a product is, the fewer risks we face. For example, in 5G, America doesn’t have many cutting-edge chips, Huawei is the sole provider. Our optical chips are the most advanced in the world. We can live without U.S. suppliers in many areas, but this is not what we want. We want to work with U.S. partners to jointly fulfill the responsibilities we have of building an information society.

Read also: Huawei CEO Ren Zhengfei: 'Shutting Huawei out is the start of the US falling behind'

Huawei is not ambitious. We don't want to dominate the world. We only want to work with our partners to build an information society. If Huawei were ambitious, we would have already dominated the most profitable markets.

Bangkok, Thailand - May 27, 2018: Asian woman using social media application on Huawei P20 pro smartphone, pointing at facebook app. Illustrative Editorial content.
Bangkok, Thailand - May 27, 2018: Asian woman using social media application on Huawei P20 pro smartphone, pointing at facebook app. Illustrative Editorial content.

Akiko Fujita, Yahoo Finance: So, when you say you have hired additional staff to work hard so that you can continue to move forward, is the idea to become increasingly self-reliant? What is the goal you have in terms of how much of products and components that you want to produce in-house in the future?

Ren: We still have to depend on the rest of the world, because no one will succeed on their own in the information society. We have to depend on the world, including the U.S., so we hope the U.S. will become more open. The U.S. government officials don't know much about Huawei, and if they come and visit our company, they may change their perceptions of us. There are rumors that we are struggling to survive, but you can see how many people eating in our canteens every day. That means our business is going on as usual.

When others stop supplying us, we will use more of our own components. When others resume their supply, we will reduce our production a bit. We maintain some supply flexibility, and we will never take the path of self-reliance or isolating ourselves from others. That would never happen.

The fact that I'm giving this interview means we are strong enough to survive and we will continue to be so. If you come by three years later, you will see us still alive and you may see more new buildings on our campus.

Akiko Fujita, Yahoo Finance: I want to pick up on that point that you just made. You said that if the U.S. could come closer and see your company, they would realize what this company is all about. Why not just invite the administration in?

Ren: We always welcome U.S. authorities to visit us. Some U.S. politicians drove by but didn't come in, and some would rather wait outside while others are meeting us. they’re not willing to come in. We can do nothing about that. I suggest they change the color of their glasses, so that they may accept the reality.

People in U.S. industry and academia know more about us than these politicians. Politicians should listen more to these people, so that they may change their misperceptions of us.

Akiko Fujita, Yahoo Finance: Okay. I want to talk about what is at the heart of this. Why has the U.S. said it targeted Huawei and that is on concerns of national security? You look at American companies, Cisco, Nortel, T-Mobile, and Motorola, they have all accused your company of stealing trade secrets and gone to court with documentation to back up the accusations. Why should those companies or the U.S. government trust you now?

Ren: New technologies are highly complicated. Although the U.S. is very strong, it hasn't developed all these technologies yet, so they have decided to pick on us by focusing on some insignificant issues. We still trust the U.S. courts for their rulings. They have made rulings on some of our lawsuits and made the right decision on behalf of the U.S. government.

We are far ahead of U.S. companies in terms of new technologies. Huawei has over 11,500 core patents granted by the U.S. government, and has over 90,000 patents that support the foundation of the information society. The U.S. should look more at Huawei's contributions to society, instead of finding fault with our weaknesses.

Akiko Fujita: The track record for Huawei in U.S. courts hasn’t been a good one.

First of all, when Cisco sued Huawei, it was the first time we experienced such a large judicial case. When the Stanford University professors compared codes, all of our filed are well-documented. The total number of codes we have at that time is more than 2.2 million lines. The amount of code in Cisco is more than 20 million lines. Who is copying whom? Secondly, during the code comparison, 1% of the codes have coincidence. This 1% coincidence is also contingent, and partly due to open source. We settled the claim. But if we were to keep pushing the case, it was false accusations. Settling was acceptable to us.

The Motorola case was triggered by a box with the Motorola logo. Although it was a settlement, they lost and case and paid us legal costs in Hong Kong. How could you say it’s our problem?

The case with T-Mobile is individual behaviors by our employees, regarding a rubber head on a robot arm. The civil case has been ruled and now we’re waiting for the court’s decision on the criminal case.

Akiko Fujita, Yahoo Finance: I guess what I'm trying to get at is, if you look at from the U.S. side, there's been a lot of litigation against Huawei and there have been multiple companies that have come forward with these accusations. Can you understand where the distrust on the American side is coming from?

Ren: This is because Huawei is far ahead of the competition. The U.S. has been used to being the world's No. 1. They will never believe that anyone is better than them. That's why they have this mindset. In this model, the U.S. will learn its lesson eventually, in three to five years.

Akiko Fujita, Yahoo Finance: And this is my last point on this, but the accusation is not based on where you are right now, which is the leader in 5G, yes, but that you got here by stealing from American companies.

Ren: From the very first day Huawei was founded, we have valued intellectual property (IP) and opposed the theft of IP. This is because Huawei is a victim of IP theft and many individuals in China have stolen our IP. None of our litigation has found that Huawei has maliciously stolen anyone else's IP.

We have a complete code comparison with Cisco. The comparison found we had completely different codes. How did we copy theirs? Only 1% of the code overlapped, and this may be because of open-source codes, so this is not a problem. The issue with Motorola is completely fabricated, because the company wants to blame someone else for its collapse. We offered 10 years of help to Motorola. Without my help, the company would fall ten years earlier. I sincerely helped the company and gave thousands of technical secrets to support it. Then its new CEO wanted to blame me for the fall of his company. The case has been ruled and the U.S. paid me money. How could the U.S. accused me of stealing IP while they paid me? They paid our litigation costs and admitted the issue was nonexistent.

Our success has always been created by our own hard work. Do you know how many scientists we have? Do you have how much investment we put in R&D? Our R&D investment ranks No. 5 around the world and we are a non-public company, which doesn’t have much money. We don't have the problem that the U.S. is imagining.

Akiko Fujita, Yahoo Finance: There are reports that have come out over the last few days that suggest you are planning significant layoffs over Futurewei R&D in the U.S. What is the future of Huawei's presence in the U.S.?

Ren: First, Futurewei is a U.S. company. According to the U.S. Entity List regulations, they cannot send any of their R&D results to Huawei and no employees of Futurewei are allowed to have any contact with Huawei employees. This makes it difficult for us to manage this company and collaborate with them. We'd better wait for the U.S.'s interpretation of the Entity List, or the U.S.'s removal of Huawei from the list.

The U.S. is home to the world's most advanced science and technology. If they are willing to work with us, we will increase our investment in technical partnerships. If the U.S. is not willing, we’ll find other ways to get things done. Before Huawei was added to the Entity List, we invested 500 million U.S. dollars into Futurewei in 2018 and planned to invest 600 million U.S. dollars in 2019. Now we cannot make further investment because we are not allowed to engage with Futurewei employees. What is our next step? This depends on the U.S. government's direction.

Akiko Fujita, Yahoo Finance: Just to confirm, there are layoffs now at Futurewei and your R&D center in the U.S. is essentially on hold right now because of Huawei being on the Entity List?

Ren: Yes. This is all because we cannot engage with Futurewei employees. If we cannot even discuss their work arrangements, how can they do their work?

Vilnius, Lithuania - November 21, 2017: Telia and Huawei headquarters office buildings in Vilnius
Vilnius, Lithuania - November 21, 2017: Telia and Huawei headquarters office buildings in Vilnius

Akiko Fujita, Yahoo Finance: Let me ask you about something that has been a consistent part of your narrative. I know you've heard this over and over, but let's talk about your military past as an engineer in the PLA. I know historically you talked about how insignificant that was when you think about when this all played out. But the U.S. administration, which has put you on the Entity List, has continuously raised this. How far do you think you need to go to convince the administration, you know, that there's no tie there right now? I'm wondering if you've thought about what more you can do and what more Huawei needs to do to get that message out.

Ren: First, I've never considered needing to convince the U.S. administration of my identity. I believe survival is success. In the future, I also won't attempt to clarify who I am to the U.S. government. I am a clean man, and I wash myself every day, and I don't think it's necessary to ask people to check whether I am clean or not.

There are also many veterans working in U.S. companies. But do we say that these companies are all backed by the U.S. military? I think the U.S. should put themselves in our shoes. China has had over 50 million veterans since 1970s, and these veterans need to work and make a living. The employment of a veteran does not suggest a company's relationship with the military. The military doesn’t have that much money. What's more, I was just a low-ranking member of the army.

I've never considered trying to convince the U.S. of who I am and will not in the future. I don't care what they think about me. What matters is that we’re better than you in the win markets. No one can rely on others to fight their battles and win markets. I don't believe in any gods. I believe that we can only rely on ourselves, not anyone else.

Akiko Fujita, Yahoo Finance: You've been asked this question on whether in fact you would be willing to take a call from President Trump. I've heard you say before that, you know, "Why would he call me?", "He has other things to do", and "We don't speak the same language". But I've also heard you say recently in an interview that yes, you are willing to take that call. Where do you stand on that right now? If he calls tomorrow, would you have a conversation with the president? In addition to that, I think you would get along with the president.

Ren: I think it could be possible. Even my family has said that we have similar personalities, because we both think in a bit high-handed way..

We have communication channels with the U.S. government, for example, through its Eastern District Courts in New York and courts in Dallas, Texas. The U.S. government can communicate with us through our lawyers. Is it really necessary to ask their big president to make a phone call to me? In addition, communication over the phone may not be clear enough. Lawyers all have evidence and they can make things clear. They can communicate with us through the lawyers.

Akiko Fujita, Yahoo Finance: Huawei is part of the trade conversation. Whether you like it or not, President Trump has made it a part of that. Since the G20 summit, there has been a back and forth, with the reports suggesting that the Chinese government is really pushing the U.S. to reduce its pressure, back off on your company as part of the concessions from the U.S. side. Are you willing to take that role? If the Chinese government asked you to be involved in the discussions, would you be willing to take part?

Ren: First, the U.S. has filed criminal charges against us, instead of attempting to negotiate. As Trump tweeted constantly, he changed his judgment on the situation and wanted to negotiate with us. He tweeted things out by himself during the G20. The United States is a country ruled by law, how do legal issues allow negotiations? The law issues should be resolved in courts, right? The trade between China and the U.S. has nothing to do with us. We barely sell anything in the United States. When the two fight, I don't buy from the U.S. Even if the U.S. wins, I still don't go there. So we have nothing to do with the tension between China and the U.S.

Trump has nothing on us, and he hopes to use Huawei as a bargaining chip, but China doesn’t seem to buy it, right? We won't go to the Chinese government to pull us into the negotiations. I hope the relevant lawsuits will reach their conclusions quickly. The procedures are too long and slow.

We still use legal issues to solve this problem with us and the United States, instead of taking the issue into the negotiation. If they need to talk, talk through the lawyers with evidence. Therefore, I am not willing to get involved in the negotiations between China and the U.S. and (let China) to save Huawei, which I don't think is possible. Your House of Representatives has not been passed a bill requiring the entity list couldn’t be be revoked within five years. Five years? How can we wait for five years? Impossible, right? That is to say, we cannot be a bargaining chip, and we are not willing to join the negotiation.

Second, if we got involved, the Chinese government would have to make concessions for us. Why should China make concessions for Huawei? If they can beat the U.S., why does the Chinese government have to make concessions? If you don't want to give in, you don't give in. How does China fighting with the United State has anything to do with me ? Some people comment that the Chinese government could trade off something for Huawei. But Huawei didn't commit any crimes, so why should they have to save us?

Akiko Fujita, Yahoo Finance: I want to talk about where Huawei's business is going. You have a presence in 170 countries. I know outside of China, Europe has been a big growth area. But as a result of the pressure coming from Washington, you face a lot of headwinds in some of the markets. The U.S. is, as you point out, virtually zero. Australia has banned Huawei, Japan is now onboard, and Europe is still a bit of a mixed picture. Where do you see your growth coming from in the next few years?

Ren: The direction we are moving in and the pace of our development have not changed, but we will need to make some structural adjustments over the next two years, as we switch the versions being used for many of our components, and it will take time to adjust and replace the existing versions. During this transition period, our growth may slow down, but from what we've seen, it won't be very much. We are continuing to move in the direction we have set, and this direction will not change.

Akiko Fujita, Yahoo Finance: What do you mean when you say it takes time to switch versions?

Ren: During this transition period, we will face some pressure in terms of production capacity and volume. All that to say, our growth may decrease over the next two years, but it will rebound in two or three years.

Akiko Fujita, Yahoo Finance: The operating system is one of the big challenges that you see. You recently made some comments about the internal, the alternate operating system that you've been developing not necessarily being made to run on smartphones. If you can't use Android, do you have a plan B?

Ren: First of all, I'd like to say a few words about our in-house OS Hongmeng. This operating system is developed to adapt to future scenarios like the Internet of Things, artificial intelligence, industrial control, and autonomous driving. The latency of this system is no more than 5 milliseconds and sometimes even less than one millisecond.

We plan to apply this operating system to IoT applications like smart watches, smart TVs, and connected vehicles, but for right now, we really don't have plans to apply it to smartphones. Huawei has an agreement with Google, and we respect their work and the achievements they have made. We will only look into developing our own smartphone OS when Android is no longer an option, but as for now, we don't plan on it.

global smartphone market
global smartphone market

Akiko Fujita, Yahoo Finance: It sounds like you are operating under the assumption that Google will get the waiver and be granted a license to be able to supply Android to Huawei. Are you in touch with Google executives at all?

Ren: No, I have not met with executives from Google, but I believe both of our companies are working hard to resolve this issue. We are working to develop a backup operating system while they are working on communicating with the U.S. government. I hope our efforts will pay off.

Akiko Fujita, Yahoo Finance: What about your 5G ambitions? Do you have to change the expectation a bit as a result of these very headwinds that you've talked about?

Ren: No, we have not adjusted our goals for 5G. This year, we are expected to ship 600,000 5G base stations, which will grow to around 1.5 million next year. Our 5G business will not be affected by the U.S. ban in any way. None of our 5G components will be affected, either. We have already developed all of the high-end components we need.

Akiko Fujita, Yahoo Finance: Just to clarify, the 2% decline is on the 5G equipment? The smartphones? What specifically were you referring to?

Ren: This decline will be from the impact of cutting out some minor parts of our business. The 5G part of our business will not be negatively affected. In fact, it will see substantial growth.

Akiko Fujita, Yahoo Finance: I want to ask you about something that I think is quite personal for you, which is your daughter, arrested back in December. You are a father. You've seen your daughter going through this legal ordeal for several months now. She's in Canada. 24-hour surveillance and ankle bracelet. What do you think as a father, as you see what has been playing out over in Canada?

Ren: First of all, we have faith in the law. Under the law, we believe the case will be addressed based on facts and evidence. Emotions cannot resolve anything. The case must be addressed by law. As the legal procedure takes a relatively long time, we have to wait. There is no better alternative.

Akiko Fujita, Yahoo Finance: Do you talk to her often?

Ren: When I call her, she sometimes says they are eating hotpot, or making dumplings or noodles. She said she was busy with work for decades, and rarely had the chance to relax that she has had in recent months.

Akiko Fujita, Yahoo Finance: How hopeful are you that it will be resolved and your daughter will not be extradited to the U.S.?

Ren: It's not just that my daughter should not be extradited to the U.S., but that she should be freed and acquitted of all charges. She is completely innocent and it was a mistake to arrest her. But we need to wait for the court's verdict.

Akiko Fujita, Yahoo Finance: I want to go back a bit from talking about Huawei to what has been playing out in China. Over the last several years, we have seen big growth in tech here in China. You know all the big names, Alibaba, Baidu, obviously Huawei in the mix. Despite that success, though, there are all those skeptics who say that those companies grew because they had no competition, and that Western companies could not operate here without a joint venture in place. Is it time to open up the markets for the likes of Google or Facebook, so that you can actually come forward and say, "Look, we competed against the best and became the best"?

Ren: Personally, I would like to see a more open market, but this is decided by the governments. For example, the U.S. government has the sovereign right to close its doors to Huawei. We will try to persuade them to be more open and less conservative, but the decision is still made by the government. It's the same here. You can also try to persuade the Chinese government. Governments in both countries are conservative.

Akiko Fujita, Yahoo Finance: Do you think that this cloud will still hover over these companies until the Chinese government opens its doors to some of these companies? Yes, these companies have grown in their own ways and yet you continue to face skeptics who say you are only this great because the market is not open. Is it time for the Chinese government to change its stance, and open up the market more to Western companies, especially tech companies?

Ren: The premise behind these questions is wrong. Huawei has been facing fierce global competition ever since it was founded. In the 1980s, 100% of China's communications equipment was supplied by foreign vendors, mainly eight vendors from seven countries. These included NEC and Fujitsu from Japan, Lucent from the U.S., Alcatel from France, Nortel from Canada, BTM from Belgium, Siemens from Germany, and Ericsson from Sweden. We grew up in the small crevices between these Western giants. How could you say we didn't experience full competition? The story is similar in the enterprise communications market, where Cisco used to dominate the world and we started from scratch. But this year, we surpassed Cisco. This is not because Cisco yielded to us, but because we have grown strong by ourselves, tempered through full competition. No one has ever protected us, and we don't expect anyone to protect us in the future. God protects you, god doesn’t protect us. We don’t believe in God.

Akiko Fujita, Yahoo Finance: Yesterday, we had a chance to walk around the campus and talk to some of your employees, and one of the conversations really struck me because there was a researcher who said, "Look, I came to Huawei because it is committed to cutting-edge technology, but I worry that the technology that I'm developing here could be misconstrued as a national security concern", that essentially, he feels the weight of the pressure that's coming from the U.S. What do you say to your employees who are wondering what this means for the future of the company and how they should push forward under all this pressure?

Ren: In fact, our employees have become more confident. I think this employee said that because he feels his work results are too advanced and too good. He may be proud of himself, and is indicating he has made great achievements in an understated way. I think this employee should be praised, as he is proud of himself. He believes that the U.S. sees us as a threat only because we are too advanced. Of course, this is my personal interpretation. I don't know him.

Our company allows employees to make some mistakes when communicating with the media. It's fine as long as 60% of what they say is right, and by "right", I mean what they really think. Currently, 70% of the international media coverage towards Huawei is negative, and the remaining 30% seems to be neutral. These media outlets do not view us positively, but at least they are friendly to us. Even if 40% of what our employees say is wrong, as long as they keep communicating, they will help turn these negative media reports into neutral ones. So it's a good thing. It doesn't matter if they make some mistakes. We encourage them to speak out about their real experiences and thoughts.

Akiko Fujita, Yahoo Finance: We're trying to get to the material impact to the company as a result of Huawei being added to the Entity List. You said before that 30 billion U.S. dollars is the number you've put on the company in terms of the impact from this designation. Does that number still hold?

Ren: The Entity List has injected a sense of crisis in our employees, and inspired passion across the company. This has provided an opportunity for us to reposition underperforming managers and replace them with outstanding young employees. This has helped increase our vitality. In this sense, the Entity List is not a negative, but a positive. It has motivated our team.

Of course, it would be better if Huawei were removed from the Entity List. But even if that doesn't happen, we will not face too much pressure. Some say that removal may not happen for five years, but will we even need the removal by that point? I don't think so. Despite their attacks, we will not hate the U.S. If we keep chomping away at the grass like sheep, we will just get fat. The U.S. is now chasing us like a wolf, so we have to start running. This will help us get fit again and become more effective.

Akiko Fujita, Yahoo Finance: I want to try to put a number on this though. The material impact, is it still 30 billion U.S. dollars?

Ren:. In H1 of this year, we enjoyed high-speed growth for about four months. Following the May 16 ban, we continued growing due to the momentum we'd built up previously. Our H1 business results should be very good, but we will see real material impact in the second half of the year. We will release our new financial report in Q1 next year. I believe the results will be quite good.

Akiko Fujita, Yahoo Finance: Given the environment that we're in right now, I've heard a lot of people refer to this as a new Cold War, saying that there's a digital iron curtain going up as a result of what the U.S. has done moving forward on pressuring the Chinese in trying to sort of constrain the technology. Is that where we're headed right now?

Ren: Although the U.S. is giving us a hard time now, if they stop doing so, we can still be friends. We will continue to buy components from U.S. companies. However, we have to be more cautious. In the past, we were comfortable with signing 10-year contracts with U.S. companies, buying large quantities of goods from them. But now, we have to sign smaller contracts on a rolling basis. In case they no longer sell us certain components, all the other components will become useless. By singing smaller contracts on a rolling basis, we will be able to more easily bear the losses caused by a supply problem.

Akiko Fujita, Yahoo Finance: One of the things that I have noticed walking around campus was the image of the aircraft. You've talked a lot about this aircraft being able to fly despite having holes in it. Why have you chosen that aircraft to represent Huawei? Why this symbolism?

Ren: I saw it on the Internet shortly after the U.S. put us on the Entity List. I had the feeling that it resembled us so much, seriously injured with wounds all over our bodies and with only our hearts beating. The aircraft was able to fly home. I believe we will also be able to fly home and land safe and sound.

Akiko Fujita, Yahoo Finance: Is there a particular company or a business leader that you really admire in the U.S.?

Ren: I admire the leaders of Google, Amazon, and the like. Our family admires Jeff Bezos. When the couple said they wanted to divorce, they got divorced immediately and spilt $60 billion. Our family doesn’t have $60 billion to split. How could you not admire that? I'm also a big fan of Bill Gates and Steve Jobs. My younger daughter is a huge fan of Mr. Jobs. On the day he passed away, she was still a little girl and proposed that we have a moment of silence to mourn him, and we did.

Why do we have so much admiration for the U.S.? Just think about how the U.S. has become so powerful. All the U.S. giants used to be small companies. They became what they are today by adjusting their structures and changing managers along the way, step by step.

Nevertheless, American IT companies have made several major mistakes during their development.

The U.S. is abandoning 5G. Even if they have supercomputers and super-large-capacity connections, the U.S. might still fall behind because they don't have super-fast connections. All three of these things are indispensable. That’s the reason a new breaking point will appear. That will leave the U.S. behind. Shutting Huawei out today is the start of the U.S. falling behind.

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