Above: Hazel Chen, Huawei Senior PR Manager presents at the Galileo Hall. Images courtesy Huawei.

BitDepth#1299 for April 28, 2021

A week ago, Huawei hosted a virtual tour of its Galileo Exhibition Hall in Shenzhen, China.
The tour leaned heavily into more recent telecommunications history and more specifically, Huawei’s significant presence in 4G and 5G infrastructure development.

The company finds itself in the odd position of being, simultaneously, a heavy investor in the heavy iron that makes mobile telecommunication possible while being blacklisted by the biggest first world markets of the west.

Huawei remains on the US Entity List, blocked from access to modern software technologies, chip designs and chipsets, which have led to a lockout of the company’s smartphone business in the US and stalled the adoption of its newest smartphones, which cannot be loaded with the commercial version of Google’s Android operating system.

Meanwhile, Huawei remains an aggressive developer of 5G technology, having invested US$4billion over the last ten years on developing cutting edge, ever more compact 5G transmission hardware. It has operated in TT for more than a decade supplying local telecoms companies with infrastructure for 4G networks.

The company employs 197,000 workers, 53.4 per cent of whom are in research and development departments at the company.
Huawei invests a hefty 16 per cent of its revenue in R&D, the majority which goes to developing mathematical algorithms and designing new chipsets.

The company has launched two initiatives to address the challenges to its smartphone business. It is developing an alternative to Android, the HarmonyOS, which in early stages, and according to an analysis by Ars Technica is currently a re-skinned version of open-source Android.

That isn’t surprising. Developing a new smartphone OS from the ground up takes time and there simply hasn’t been enough time for an Android alternative to progress to usability.

Asked about the company’s plans to manage the Entity List freeze, Hazel Chen Huawei’s Senior Public Relations Manager, said, “It’s been a difficult time for the company because of geopolitical situations. The Honor brand was divested to be able to access parts for its supply chain in November.”

Honor was a US subsidiary brand developed as a lifestyle entry for the company’s smartphone business.
The divestment to Shenzhen Zhixin New Information Technology Company was described then as a “a market-driven investment.”

One that was “a chance for survival and a response to a proposal by more than 30 agents and dealers of the smartphone, smartwatch and laptop brand that ships over 70 million units annually.”
The new company promised to “follow market rules for fair transactions.”
“We have other devices and products that work with smartphones and which meet consumer needs available,” Chen said.
“The consumer business has been constantly changing and has been continuously adjusted; we have not just been waiting.”

In a subsequent statement, Huawei added the following statement in response to my questions, “For Honor, the answer is that it has been divested and it is now an independent new company with a different owner.”

“For the corporate strategy, the answer is that our strategy has always been consistent – to serve our customers and meet their expectations without minding going the extra mile, though we have to make adjustments based on the environment and the circumstances, especially during the pandemic.”

“We’ve had challenges before, and this is not our most difficult time. We are confident to adapt and emerge from the challenges in a better shape.”

Huawei has clearly shifted its business emphasis to infrastructure equipment. There were no smartphones on show in the Galileo Hall, just miniature towers, IOT technologies, broadcast equipment and wireless base stations. The problems with chipset supply isn’t as pronounced for back office hardware, which uses fewer chips.

“We can support our infrastructure customers for years and years,” said Jean Francois Tremblay, VP Communications at Huawei.
“The infrastructure business is unchanged.”

“The Enterprise Business Group had 23 per cent growth because of pandemic related acceleration of development as becoming more digitally agile has become more important,” said Chen.
“We have many combinations of technologies available, end-to-end solutions that we can deploy to address customer needs.”

Making time to talk to journalists from Jamaica and TT makes business sense for the company, which has been developing mobile infrastructure in TT for more than 15 years and has made investments in Jamaica. In November 2019, the company announced a smart city surveillance project in Guyana.

Despite setbacks to its business, Huawei reported profits of US$9.9 billion, up 3.2 per cent, with revenue from China accounting for 65.6 percent of its total income.
Since the election of President Biden, there has been no indication of change on its hardline market stance against China, and no easy way forward for Huawei.

The company’s investments in R&D and chipset design are simply necessary for its continued survival.
The Honor divestment points to a potential migration of the considerable intellectual property assets it has created for its smartphone line to a company that can make them competitive in the market.

Huawei’s future seems focused on developing the telecommunications infrastructure for the rest of the world, the nations who can officially shrug when the US frets over their use of the Chinese company’s technology.

Fortunately, there are a lot of countries with a need for fast Internet access across vast geographic regions and wireless broadband is a solution that works for many of them.