China surveillance giant warns of client losses after US curbs

Bloomberg

Hangzhou Hikvision Digital Technology Co warned it may lose customers in overseas markets because of its US blacklisting, underscoring the extent to which curbs on the sale of American technology may hurt the world’s largest video surveillance business.
Executives at the Chinese camera provider, which reported profit in line with estimates, said however the company was large enough to withstand US sanctions and develop its own technology in the longer term. Its own market remains a rich source of revenue even though the US business is also shrinking, a trend that may persist for a while, Huang Fanghong, a Hikvision senior vice president, said.
Hikvision found itself in the cross-hairs of the Trump administration this month after it joined other Chinese companies — including Huawei Technologies — on an Entity List that prevents American firms from supplying it with components and software. The seller of video cameras used around the world in surveillance was accused of involvement in human rights violations against Muslim minorities in the far-western region of Xinjiang.
Hikvision executives say they had anticipated the action and stockpiled enough key parts to keep operations going for some time. The firm has said it didn’t foresee a major impact on its business as a result of the ban.
In Huawei’s case, for instance, some suppliers including Intel Corp and Micron Technology Inc developed workaround solutions to the prohibition. Most of Hikvision’s US suppliers are continuing to do business with it, while abiding by export regulations and without the need for special licenses, Huang said.
“We have made a great deal of preparations, from a year ahead of the ban,” said Huang. “There’s no way for us to fully discuss the impact from the entity list in 10 days. We need more time to talk to our suppliers and customers. A steady component supply is key in this process, no matter if we decide to use original materials or a replacement design.”
The US decision, which came on the eve of sensitive trade negotiations, takes President Donald Trump’s economic war against China in a new direction: the first time his administration has cited human rights as a reason for action. It deals a potentially heavy long-term blow against Hikvision, which has steadily switched to Chinese-made components in recent years but still relies on the likes of Intel Corp, ON Semiconductor and Texas Instruments, for higher-end chips.