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Huawei boosts procurement from South Korea, Japan amid US trade tensions

Chinese telecom equipment provider Huawei Technologies Co. Ltd. has increased procurement from South Korea and Japan to reduce the risk of relying on a "single supplier or country," a source close to the company told S&P Global Market Intelligence.

The U.S. added Huawei to its "entity list" in May, prohibiting domestic companies from doing business with the Chinese giant unless authorized by the government. U.S. allies including New Zealand and Australia adopted similar bans. In Europe, Germany decided against restricting Huawei, while others are still deciding.

Huawei confirmed that it reduced procurement from U.S. suppliers. According to data obtained from the company, components procured from South Korea amounted to about 15.2% of the total in 2018, while the portion procured from Japan was about 9.4%. Nearly 60% of Huawei's 2018 procurement came from outside the U.S., South Korea and Japan, the company said. Therefore, about 15% came from the U.S.

Five years ago, the company said about one-third of the components it procured came from U.S. suppliers. In 2018, the proportion was US$11 billion from a total of US$70 billion, or just over 15.7%, according to reports.

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According to an Oct. 1 poll conducted by the financial newspaper Nikkei, about 80% of Japanese companies are still doing business with Huawei. In an Oct. 16 interview with Japanese news media Kyodo News, Huawei CEO Ren Zhengfei said he is keen to boost cooperation with Japanese companies.

South Korean state-backed news agency Yonhap reported Oct. 11 that Huawei signed a 5G cooperation memorandum with KBIZ, or Korea Federation of SMEs, to help the small and medium-sized companies in South Korea test 5G services.