Huawei closes corporate business unit in Russia

In a nutshell: Chinese tech giant Huawei is shutting down its business unit in Russia, fearing the already heavily sanctioned company could face secondary sanctions for allowing state use of its systems and equipment.

The Russian daily Vedomosti reports that the unit, which sells data storage systems and telecommunications equipment to businesses, will be disbanded on January 1. The SCMP writes that about 2,000 employees will be transferred to Huawei offices in other Commonwealth Independent States (CIS). country or be licensed.

The report said Huawei will retain the business unit’s offices in Moscow as it is ready to return if “active hostilities” in Ukraine cease. The company’s research and development centers in Moscow, St. Petersburg, Nizhny Novgorod and Novosibirsk will not be impacted and will continue to work on projects such as 5G, computer vision and virtual reality.

Huawei, of course, was placed on the Bureau of Industry and Security (BIS) Entity List by the Donald Trump administration in May 2019, barring it from accessing American-made technology or dealing with companies. that uses American tools or designs, including TSMC. It can’t even ship handsets with Android or Google’s app suite preinstalled. For example, the company’s consumer division, which covers smartphones, is seeing its revenue drop 25% year-on-year.

To avoid even more sanctions, Huawei reportedly fired some local employees in Russia and suspended new carrier contracts in April after the country invaded Ukraine. It is also separating its corporate division in Russia and Belarus from other CIS countries from 2023. The company reportedly moved some employees in Russia to Kazakhstan and Uzbekistan in September.

Last March, China said it opposed “unlawful” sanctions against Russia by the United States and its allies. Some Chinese companies operating in the country have been dogged by sanctions, and drone maker DJI Technology Co has become the first Chinese company to suspend sales to Russia (and Ukraine), which it says should prevent the use of its drones in combat.

In other Russia news, we heard earlier today that the country can’t get its locally designed processors from foreign fabs. This is all the more bad news as China has banned the export of its Longsoon processors to the country.

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