On the evening of November 23, 2023, Yu Yingtao, president and CEO of New H3C Group, issued a letter to all employees, saying that the company will take the initiative to reduce salaries. It is believed that the company's middle and senior cadres and senior employees, including Yu Yingtao, will voluntarily reduce their salaries by 10%-20% to cope with the slowdown in performance growth. According to him, affected by the overall situation of the industry, the performance growth of Xinhua III has slowed down, in order to further reduce operating costs and escort the sustainable development of the enterprise, the company decided to take this targeted management initiative.
Judging from the published data, although some segments of the company have maintained good growth, the growth rate of total operating income is significantly lower than last year. According to the data provided by Unisplendour, as of the end of the third quarter of 2023, H3C's operating income was 3757 billion yuan, of which the revenue of domestic operator business is 763.5 billion yuan, a year-on-year increase of 2094%。Overseas revenue increased by 1372%, and the overall sales scale is also continuing to expand. However, based on the average revenue of the first three quarters in the fourth quarter, that is, about 12.5 billion yuan, it is expected that the revenue for the whole year of 2023 will reach nearly 50.1 billion yuan, an increase of only 06%。This growth is significantly lower than the 123% increase.
The reason for this slowdown in performance growth is mainly due to the changes in the global semiconductor industry and the impact of the U.S. semiconductor export restrictions to China. In 2022, the United States introduced a semiconductor export restriction policy to China, restricting the export of high-performance computing chips to China. In October this year, the United States further upgraded its semiconductor export control policy to China, especially the export of high-performance AI chips. This has undoubtedly brought trouble to H3C's AI server-related business, making the development of this business face major challenges.
As an enterprise with all-round digital infrastructure capabilities, H3C provides solutions in chips, computing, storage, networks, 5G, security, terminals and other aspects, as well as end-to-end technical services. H3C is also the exclusive provider of HP enterprise servers, storage, and technology services in China. According to the statistics of IDC, Gartner and other research institutions, H3C maintains the second market share in China's enterprise network router market, Ethernet switch market and enterprise WLAN market, and also ranks second in China's x86 server market.
The comprehensive salary reduction of the middle and senior management of Xinhua III has attracted widespread attention and discussion. On the one hand, this voluntary salary reduction shows the sense of responsibility and responsibility of the company's management, and reflects their importance to the sustainable development of the company. This will help reduce operating costs, enhance the operational stability of the company, and create better conditions for the company's future development.
However, on the other hand, this also exposes the unoptimistic side of the business situation of Xinhua III. The reason for the slowdown in the company's performance growth is related to changes in the semiconductor industry and U.S. policy restrictions, which means that the company's operating environment is subject to greater uncertainty and risks. In order to meet this challenge, it is difficult to improve a company's profitability in a sustainable and effective manner simply by reducing employee compensation. It is more necessary for the company to adopt a more comprehensive and in-depth strategy to respond to market changes and enhance its core competitiveness.
In short, the comprehensive salary cut of the middle and senior management of Xinhua III is a response to the slowdown in the company's performance growth, and it is also to reduce operating costs and better ensure the sustainable development of the company. As an enterprise with comprehensive capabilities in the field of digital infrastructure, H3C occupies a place in the market. However, the company still needs to be vigilant against the challenges brought about by the current changes in the semiconductor industry and the restrictions of international policies, actively adjust business strategies, enhance core competitiveness, and maintain a good momentum of development. At the same time, for employees, it is hoped that they can respond to the changes faced by the company with a more positive attitude and professionalism, and contribute to the development of the company.