Technology

Huawei is closing its enterprise business unit in Russia

Chinese tech giant Huawei is closing down its enterprise business unit in Russia over concerns that the already heavily sanctioned company could be subject to secondary sanctions for allowing their systems and equipment to be used by the state.

Russia’s Vedomosti daily reports that the unit, which sells data storage systems and telecommunications equipment to corporate clients, will be disbanded on January 1. SCMP writes that around 2,000 employees will be asked to transfer to Huawei’s offices in other Commonwealth of Independent States (CIS) countries or be laid off.

The report states that Huawei will be retaining the business unit’s offices in Moscow as it is prepared to return if “active hostilities” in Ukraine stop. The company’s research and development centers in Moscow, St. Petersburg, Nizhny Novgorod, and Novosibirsk will not be impacted and they 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, preventing it from accessing American-made technology or dealing with companies that use US tools or designs, including TSMC. It can’t even ship handsets with Android or Google’s suite of apps pre-installed anymore. As such, the company’s consumer division, which covers smartphones, saw revenue dip 25% YoY.

In an effort to avoid even more sanctions, Huawei reportedly furloughed some local employees in Russia and suspended new contracts with operators in April following the country’s invasion of Ukraine. It’s also separating its corporate division in Russia and Belarus from other CIS countries starting in 2023. The company reportedly moved some employees in Russia to Kazakhstan and Uzbekistan in September.

Back in March, China said it opposes “illegal” sanctions against Russia by the United States and its allies. Some Chinese companies operating in the country have been impacted by sanctions, and drone maker DJI Technology Co became the first Chinese firm to suspend sales in Russia (and Ukraine), which it says was to prevent its drones from being used in combat.

In other news from Russia, we heard earlier today that the country could not obtain its domestically designed CPUs from foreign fabs. That’s especially bad news as China has banned the export of its Longsoon processors to the country.