Huawei may lay off a portion of its workforce due to weak smartphone profits, an internal memo from the company obtained by Reuters suggests. The memo was sent by Huawei Group's founder Ren Zhengfei on Friday and warned employees to work harder, adding that those who "just want to count money in bed" and aren't doing their best will be laid off. If everyone isn't working hard, Huawei will "fall apart," Zhengfei concluded in the memo.
While the Chinese consumer electronics manufacturer is apparently making money from its phone business, the profits it's recording are reportedly low and the unit's financial performance missed in-house targets, the company's Chief Executive Officer Richard Yu recently revealed at the sidelines of Mobile World Congress (MWC). Huawei's mobile business accounts for approximately one-third of the annual revenue recorded by the Shenzhen-based tech giant, which is why the company's top management is looking to improve its financial performance.
This latest turn of developments is apparently causing a lot of concerns among Huawei's 170,000 employees, close to half of which are working in research and development, the division that could reportedly be the first one to face cuts in the coming months if Huawei's financial performance doesn't improve. A source from the company told Reuters that many of the company's employees are disillusioned by Zhenffei's comments and are now coming to terms with the fact that they may not have a future at Huawei. The Chinese tech giant commented on this report by stating how the company doesn't have a "layoff plan," but didn't elaborate on the matter. However, sources from the firm who have spoken with Reuters claim that isn't true as Huawei allegedly adheres to an annual quota that sees it eliminate five percent of its worst performers while pushing other underperformers to positions nobody wants. Recent comments by Yu suggested that Huawei will streamline its product portfolio over the course of 2017 and it seems that the company's workforce may experience a similar change during the same period. Huawei's attempts to make its phone business more profitable coincide with the company's growing focus on high-end smartphones like the P10 Plus, a market segment that traditionally boasts significantly higher profit margins.