Can Huawei thrive despite American sanctions?

Ren Zhengfei, its boss, has big plans

HUAWEI ONCE looked unstoppable. Having begun life in 1987 selling phone switches from a flat in the southern city of Shenzhen, in 2012 the Chinese technology firm overtook Sweden’s Ericsson to become the world’s biggest maker of telecoms gear. By 2020 its market share topped 30%, roughly as much as Ericsson and Nokia of Finland, its two main rivals, combined. The same year it surpassed Samsung as the largest maker of smartphones. Its fast-growing software and cloud-computing businesses were beginning to compete with America’s IBM and Oracle.

The American government had other plans. Successive administrations have regarded Huawei as a national-security risk, claiming that it has deep links with the People’s Liberation Army and that its gear could be used for spying (allegations that have not been proven and that Huawei denies). The American government has banned Huawei’s wares at home and urged allies to ditch them from their 5G mobile networks. Most cripplingly, it used export controls to starve the company of American technology and products, including computer chips, on which many manufacturers rely. In the latest blow, on October 24th the Department of Justice said it had indicted two Chinese spies for attempting to obtain inside information about a federal investigation into Huawei.

All this has turned a company on track to be one of the world’s biggest into its most controversial. The results have been devastating. After years of uninterrupted growth Huawei…