Huawei now faces a "live or die moment" brought on by sanctions from the U.S. against the company and is putting employees on notice, based on a recently reported internal memo. Sent out by founder Ren Zhengfei, the memo points the circumstances surrounding a recent but temporary reprieve granted by United States Commerce Secretary Wilbur Ross and the dire circumstances it faces moving forward.
The above-mentioned extension will last for 90 days, ending November 19 but that is only intended to give U.S. companies breathing room to move away from Huawei. That means it won't be extended further even if U.S. companies find solutions before Huawei is ready. As a result, the pressure is mounting against the Chinese tech giant to build a new supply chain and its own tech ecosystem.
That's something Huawei is working toward by building out a new supply chain and even an alternative operating system. But its sales figures and its expected return on investments are expected to fall drastically as the year wears on as well.
If details about the memo are accurate, then employees at Huawei will bear the brunt of the crunch.
This is impacting Huawei employees across the board
Not only is Huawei looking to expand on its offerings globally with more in-house or more localized solutions. It's also looking to trim back on spending and get rid of any employee that isn't pulling their weight.
The executive says that employees need to make "meritorious deeds" and management needs to "promote outstanding employees" in a bid to "infuse new blood" into Huawei. The founder goes quite a bit further still, saying that 'redundant' and 'underutilized' employees need to step up too, the source reports.
Employees who don't meet that guideline will face salary cuts and eventual firing if improvements aren't seen.
More succinctly, the memo states that employees need to be actively exploring new projects by forming "commando squads."
Those projects need to drive progress for the company forward. Projects that perform well and their leaders will essentially be promoted. The overarching idea is to incorporate new ideas into the company's ongoing attempts to maintain as much growth as possible.
Conversely, those that aren't able to accomplish that will need to find new jobs for themselves within the company. For every three months that employees don't do one of those two things, the salaries of those workers will diminish. In some cases, jobs may be unceremoniously cut instead, the memo reveals.
This could be good for the industry
While the ban is expected to remain permanent after the new 90-day period, it could feasibly be extended indefinitely. That's all going to come down to whether or not alternatives to Huawei can be found by U.S. companies. That seems unlikely at this juncture since Huawei is taking its own steps away from U.S. companies and their partners. So it's probable that the ban will be made permanent after the period ends.
That doesn't mean it will be bad for the industry, however. Despite drops in sales and expected sales, Huawei is still standing solidly on its own.
The company has unveiled its own replacement operating system and currently makes some of the best hardware to be found. There's a good chance this downturn could be good for the Chinese tech giant and the industry as a whole.