Huawei Technologies is considering new emerging markets and new strategies in response to setbacks and sanctions on its expansion plans in the West, company chairman Liang Hua said at a business forum held this week. week in Shenzhen.
Liang said at the “Connectivity+: Innovate for Impact” forum held on Wednesday, November 23 that Huawei plans to provide telecommunication services to 120 million people in rural areas of 80 countries by 2025. In particular, he said the Chinese tech giant was targeting new markets in Southeast Asia, Africa and the Middle East.
This marks a difficult strategic pivot for the struggling tech company. In May 2019, the U.S. Department of Commerce listed Huawei and its 70 subsidiaries on its Entity List and banned the sale of hardware and software involving U.S. technology to Huawei and its subsidiaries.
These punitive measures, imposed in the name of national security, have included a ban on the use of products made by Huawei in the United States as well as blockages on the sale of high-end US-made chips to the company. The United States also banned Huawei from using Google’s Android operating system.
The UK, Australia, New Zealand, Canada, Japan and Taiwan have all said they will do the same. Some European countries such as France and Germany have not announced formal official bans on Huawei products, but analysts believe that even these countries have “implicit” bans in place.
These sanctions have torpedoed Huawei’s results. The company announced in August that its net margin fell nearly 50%, from 9.8% to 5%, in the first half of 2022 compared to the same period last year. Huawei’s net profit fell 52% to 15.1 billion yuan over the same period.
In response, Huawei founder, chief executive Ren Zhengfei, wrote in an internal memo in late August that the company would shut down or reduce unprofitable businesses and focus more on its high-value lines in the coming years.
“Our respite period is 2023 and 2024. We don’t know if we can achieve breakthroughs in these two years,” Ren said in the memo. “Therefore, everyone should no longer present concepts but talk about reality, especially in business forecasts.”
Six main activities
Wednesday’s forum seemed to outline at least one aspect of the company’s new international strategy.
The event was followed via the Internet by ministers and regulators from Cambodia, Nigeria, Bangladesh, Pakistan and South Africa. Industry experts from South Africa, Belgium and Germany also attended virtually.
Liang said Huawei’s six core businesses are information and communications technology infrastructure, terminals, digital power, cloud, intelligent automotive solutions and its fabless semiconductor business under the Hisilicon brand.
“Our vision and mission is to bring digital technologies to every home and organization,” Liang said. “We will apply innovative technologies to our solutions to enable connectivity and reach people’s lives.”
“Over the past few years, we have worked hard to resolve issues with our products, solutions and services,” he said in comments on Western sanctions. “We will continue to work on our supply issues so that we can continue to provide our products and services to our customers in the future.”
While expanding overseas, Liang said Huawei will also be mindful of its social responsibilities. He said one of the company’s latest efforts is to join the International Telecommunication Union’s Partner2Connect digital alliance.
ITU is a United Nations specialized agency responsible for information and communication technology (ICT) that seeks to facilitate international connectivity in communication networks and improve access to underserved communities around the world .
Huawei on Wednesday signed an agreement to join P2C and has targeted providing connectivity to around 120 million people in remote areas of more than 80 countries by 2025. Currently, the company has already connected 60 million people to the abroad in a dozen countries, he said.
ITU Deputy Secretary-General Malcolm Johnson said expanding telecommunication services in rural areas is not only about connectivity but also about affordability.
Johnson said Huawei’s engagement in the P2C alliance will help improve connectivity and digital skills in rural areas.
Siddharth Chatterjee, UN Resident Coordinator in China, said policymakers, telecommunications service providers, academia and civil society should come together to close the “digital divide”, which excludes a third of the global connectivity population.
In 2018, Huawei launched a pilot program called RuralStar in the African country of Ghana to connect people in remote areas.
Cao Ming, president of wireless solutions at Huawei, said he hoped developing countries would open up their markets and launch supportive policies to extend internet connections to more roads and rural areas.
Cao said the lack of affordable terminals is the main problem for low connectivity in rural areas.
“We all know that 4G is 10 times faster than 3G. But in Africa, upgrading from 3G handsets to 4G costs an additional $8 per person, which forces most users to stick with 3G services,” he said.
Cao said Huawei has managed to cut costs by erecting poles instead of building expensive towers and bases, and by using solar energy to power equipment in rural areas of Ghana. He said about 2,000 RuralStar sites connected 3.2 million people, with each hub serving about 1,000 to 2,000 people in Ghana.
Cao added that the model has been replicated in a dozen other countries, with local governments and telecom operators now more motivated by the shortened payback period, which he says is now around one to three years. .
Middle East and Southeast Asia
Last year, the United States urged the United Arab Emirates to remove Huawei from its telecommunications network or it would end an earlier deal to supply the country with F-35 fighter jets. In July this year, Washington signed an agreement to develop 5G and 6G networks in Saudi Arabia in a bid to reduce Huawei’s influence in the oil-rich kingdom.
In October 2021, Huawei Digital Power, a unit of Huawei Technologies, said it had won a contract to set up a solar power system for the Red Sea project, a mega-property project in Saudi Arabia. The company will integrate its digital information technology with photovoltaic and energy storage technologies in the project.
“We expect the Middle East to become a major technology hub in the future,” Liang said. “The Middle East can build more data centers and use its high computing power and artificial intelligence technologies to build smart cities and boost the digital economy.”
Liang said the Middle East can adopt solar power more easily than other places because of its longer days.
He added that Southeast Asian countries such as Indonesia already have well-established infrastructure, so now is the right time to develop more applications by integrating 5G and AI technologies in enterprises. manufacturing and agriculture.
He said online education, medical services and e-government represent good business opportunities for Huawei in the region.
Read: Huawei profits plummet as US sanctions bite
Follow Jeff Pao on Twitter at @jeffpao3
