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Huawei faces a 'life or death crisis,' CEO says as he lays out 'battle' strategy amid US pressure

Key Points
  • Huawei is facing a "life or death crisis" amid continued pressure from the U.S. government, Ren Zhengfei, its founder and CEO told employees.
  • The Huawei boss laid out plans to bring more efficiencies to the organization, including simplifying the reporting structure and moving managers to other positions where required.
  • The Chinese tech giant is on a U.S. blacklist which restricts American businesses from selling products to Huawei. Those restrictions have been eased for another 90 days.
Ren Zhengfei, founder and chief executive officer of Huawei Technologies Co., speaks during an interview at the company's headquarters in Shenzhen, China, on Tuesday, Jan. 15, 2019.
Qilai Shen | Bloomberg | Getty Images

Huawei is facing a "life or death crisis" amid continued pressure from the U.S. government, its founder and CEO told employees, as he laid out a strategy for the Chinese telecommunications giant going forward.

In a memo to employees of Huawei's networking division seen by CNBC, Ren Zhengfei described the company's current situation as a "battle." Ren is well-known for using military language in his communications with employees.

In May, the company was put on a U.S. blacklist — or the so-called Entity List — which restricts American businesses from selling to the Chinese firm. Huawei relies on a lot of American technology from software to hardware.

But on Monday, the U.S. administration extended a reprieve for the telecommunications company for 90 days. U.S. businesses can sell specific products to Huawei during the 90-day period.

"Now that the company is at a life or death crisis, our first priority is to encourage all crew to make contributions, and the second is to choose and promote talents, to add 'new blood' to our system," Ren said, according to a CNBC translation of the memo. He said there will be "new blood" in the company in three to five years.

The Huawei boss laid out plans to bring more efficiencies to the organization. This included simplifying the reporting structure, cutting down on surplus staff, axing repetitive jobs and moving managers to other positions as required.

He also urged staff to make sure people pay attention to the quality of the contracts they are signing with customers to ensure Huawei is paid on time and does not suffer any cash flow issues.

Ren added that Huawei would also accelerate the purchase of important equipment in order to meet customers' demand.

'Security threat' to the US

The Chinese telecommunications firm has been increasingly caught up in the trade war between the U.S. and China.

As a result, Huawei has been trying to wean itself off reliance on American technology. The company designs its own processors for its smartphones and recently released an operating system for various devices called Harmony OS. Richard Yu, CEO of Huawei's consumer division said that it would prefer to continue to using Google's Android operating system, but if it was not able to, it could switch to HarmonyOS "immediately."

President Donald Trump has sent mixed signals over the last few months about the fate of Huawei in the U.S.

In May, he said that it was "possible that Huawei would be included in a trade deal." But this weekend, Trump said he didn't want to do business with Huawei "because it is a national security threat."

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Watch CNBC's full interview with Secretary of State Mike Pompeo

U.S. Secretary of State Mike Pompeo, however, said the message from the administration is clear.

"President Trump has been unambiguous. I don't think there's a mixed message at all," Pompeo told CNBC. "The threat of having Chinese telecom systems inside of American networks or inside of networks around the world presents an enormous risk — a national security risk. Our mission set is to find a way to reduce that risk, to take that risk down as much as we possibly can."

The U.S. has said that Huawei products carry a risk of allowing Chinese authorities to spy on Americans via backdoors, something the Chinese tech company has repeatedly denied.

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Additional reporting by CNBC's Hilary Pan.