Huawei founder Ren Zhengfei will take part in a panel discussion at the company's headquarters in Shenzhen, Guangdong Province, China on June 17, 2019.
Aly song | Reuters
BEIJING – Chinese telecommunications giant Huawei has announced that it is expanding its team of scientists despite the company losing revenue in the wake of US sanctions.
It's a bet that doubling research can help China build its own technologies now that the US under President Joe Biden's administration is out to compete with Beijing and give the Chinese company access to semiconductor technology from the US have restricted.
Huawei CEO Ren Zhengfei claimed at an internal meeting in early August that the company paid its growing workforce on time, despite pressure from the United States, according to materials released on Wednesday. Many Chinese companies often postpone paying their employees or force layoffs without a severance package.
"Despite US restrictions in the past two years, we haven't changed our human resources policy and everything is going as usual, including wage and bonus distribution, salary increases and company shares," Ren said, according to an English language transcript from CNBC. "There was no chaos in the company. Instead, the company is now more united than ever and has attracted even more talent."
The telecommunications company claims it increased its workforce by 3,000 between late 2019 and 2020 amid the coronavirus pandemic outbreak. A little more than half, or 53.4% of the workforce, work in research and development, according to Huawei.
In 2019, former President Donald Trump's administration blacklisted Huawei, citing national security concerns, preventing American companies from selling technology to the Chinese company. Huawei has denied that it poses such a threat.
"Because of US restrictions over the past two years, we're no longer trying to use the best components to make the best products," said Ren. "Instead, we are using scientific and sensible methods to ensure balanced traffic throughout the system and using appropriate components to make quality products, which has greatly improved our profitability."
A slump in global smartphone sales has also hit Huawei's business.
The company reported sales of 320.4 billion yuan ($ 49.67 billion) for the first six months of 2021, down from 454 billion yuan for the same period last year. This year's first-half sales were even lower than in the first half of 2019 and 2018 before the pandemic and US sanctions.
The two largest business areas, Consumer and Carrier, recorded sharp declines in the first half of 2021 compared to the previous year. The much smaller corporate business on which Huawei has focused its growth strategy grew by 6.6 billion yuan.
Ren was still determined to pay for scientists – and spoke of an undisclosed amount in compensation for professors at the prestigious Chinese Tsinghua University.
“If the company hadn't paid attention to basic research and research over the past decade, worked closely with the world's leading scientists, or valued those who had done basic research over the past decade, we wouldn't have the vast amount of theoretical , technological and engineering knowledge needed to overcome the difficulties created by US restrictions and blockades, "he said.
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Ren's comments come as China's central government tried to address labor shortages in high-tech industries like manufacturing. Beijing has ambitious plans to build its own technology – in semiconductors and quantum computing – over the next decade.
"China has seen economic bubbles where young elites are all rushing to do things that produce quick returns with relatively little investment," said Ren.
"China is still lagging far behind in products such as machine tools, equipment and process engineering, instruments and measuring devices, as well as materials and catalyst research. What methods can we use to conduct production experiments under such circumstances? This is a difficulty that we are now facing."
– CNBC's Arjun Kharpal contributed to this report.