China's Hikvision sees only limited impact from U.S. blacklisting

SHANGHAI (Reuters) - Chinese video surveillance company Hikvision will only suffer a limited, short-term hit after being blacklisted by the U.S. government and will strive to get the ban lifted, its general manager said on Wednesday.

FILE PHOTO: People visit a Hikvision booth at a security exhibition in Shanghai, China May 24, 2019. REUTERS/Aly Song/File Photo

Hikvision was one of eight Chinese firms put on an expanded U.S. blacklist on Monday to punish Beijing for its treatment of Muslim minorities, in a move that has escalated tensions ahead of Sino-U.S. trade talks in Washington this week.

Hikvision has come under fire for allegedly supplying surveillance equipment across the province of Xinjiang, where Uighur Muslims are being held captive in detention centers.

The company, which calls itself the world’s biggest maker of video surveillance equipment, has already been banned since August from selling to U.S. federal government agencies on the grounds its products could pose a threat to security.

The new U.S. measures, also directed at top Chinese artificial intelligence (AI) startups SenseTime Group Ltd and Megvii Technology Ltd, bar Hikvision from buying components from U.S. companies without Washington’s approval.

General Manager Hu Yangzhong told reporters on Wednesday it had been preparing for a possible U.S. ban for more than a year and its overall reliance on U.S. components was “extremely low”.

He said the company remained confident about its long-term business prospects despite being added to the U.S. blacklist.

The U.S. dominates the market for graphics processing units (GPUs) which are critical for image processing but Hu said reliance on GPUs will decrease as the AI sector advances.

“All Hikvision clients can rest assured Hikvision has the ability to guarantee continued, stable supply of products,” said board secretary Huang Fanghong, adding that the company would continue to expand in the United States and other markets.

John Honovich, founder of surveillance video research company IPVM, has said Hikvision uses Intel Corp, Nvidia Corp, Ambarella Inc, Western Digital and Seagate Technology as suppliers.

The company, which has a market value of about $42 billion, is 42% owned by Chinese state investors and its two main founders. It pulls in nearly 30% of its 50 billion yuan ($7 billion) in annual revenue from abroad.

Hikvision temporarily suspended trading in its shares on the Shenzhen Stock Exchange on Tuesday after the U.S. announcement.

Hu said the company had been communicating with various branches of the U.S. government about the situation in Xinjiang, and had hired human rights lawyers to defend itself.

“The U.S. government doesn’t care at all about the things Hikvision is doing in Xinjiang,” said Hu. “The thing they care about is sanctions.”

Reporting by Josh Horwitz and Samuel Shen in Shanghai; editing by Edwina Gibbs and David Clarke