Huawei has admitted its smartphone sales have slumped by 40 per cent and the company is to slash production in the wake of US threats of blacklisting.

Founder and CEO Ren Zhengfei announced at headquarters in Shenzhen that the Chinese telecoms giant's overseas smartphone sales had plummeted.

Washington has accused the firm of carrying an espionage threat and working as a vassal of Beijing.

When asked whether he could confirm media reports citing anonymous sources which said its overseas smartphone sales had fallen, Ren said: 'Yes, (sales) have fallen 40 per cent.'

Huawei's founder and CEO Ren Zhengfei (pictured at headquarters) says overseas smartphone sales have tumbled after US pressure on the Chinese firm

The Trump administration has clamped down heavily on the firm and accused them of acting as a vassal of the ruling Communist Party in China

He gave no further details on the sales plunge but a Huawei spokeswoman later clarified that he was referring to a 40 per cent fall from May to June in the wake of the US blacklist threat.

Ren added, however, that sales growth in China's domestic market remained 'very fast'.

Huawei was the world's number two smartphone producer last year, ahead of Apple and behind South Korea's Samsung, as well as the largest provider of telecom networking equipment.

Huawei has said it shipped a total of 206 million smartphones in 2018, about half in China and half overseas.

Ren, 74, said Huawei planned to cut production by $30 billion over the next two years to ride out the storm. He did not specify which lines of business would be hit most.

Huawei earned just over $100 billion in revenue in 2018, so a $30 billion reduction would equate to about 30 per cent of last year's overall business.

But Ren, who compared Huawei to a damaged but still-flying aircraft, added that he expected the company to soon back on track.

Graphic of key business figures for China's Huawei, which says its overseas smartphone sales will slump

Huawei founder Ren Zhengfei attends a panel discussion at the company headquarters in Shenzhen

'In 2021, we will regain our vitality and (continue to) provide services to human society,' he said.

Huawei has emerged as a key bone of contention in the wider China-US trade war that has seen tit-for-tat tariffs imposed on hundreds of billions of dollars worth of goods.

President Donald Trump's administration has essentially banned Huawei from the huge US market.

Last month it also added Huawei to an 'entity list' of companies barred from receiving US-made components without permission from Washington, though the company was granted a 90-day reprieve for now.

The US fears that systems built by Huawei could be used by China's government for espionage via secret security 'backdoors' built into telecom networking equipment.

Those fears have revolved in large part around Ren's background as a former Chinese army engineer, and questions over the privately-held Huawei's corporate ownership structure, which some critics say is unusual and opaque.

Huawei strongly denies any links to China's government and says the United States has never provided proof of its accusations.

Make up artists prepare Ren Zhengfei for his appearance at the panel discussion on Monday

The Trump administration is pressing other countries to ban Huawei equipment from their networks, particularly in the coming rollout of super-fast 5G networks, a global project in which Huawei had been expected to play a leading role.

The US campaign has already spurred a number of major technology companies, including leading semi-conductor suppliers and brands such as Facebook and Google, to suspend cooperation with Huawei.

In an analysis last week, global consultancy Eurasia Group said Huawei 'has little hope of staying on the global cutting edge in either smartphones or networking technology as long as it remains on the US Entity List.'

'Over time, this will erode Huawei's ability to offer globally competitive products, and the company will likely be forced to resort to selling second-best products in the domestic Chinese market as it seeks to rebuild its international business without US technology,' it said.