LightCounting Releases 2021 Huawei Analyst Summit Highlights
LightCounting has just released a research note with key findings from the 18th Annual Huawei Global Analyst Summit, held in Shenzhen April 12-14, 2021. LightCounting analysts attended the event in person and virtually.
It is a difficult time for Huawei. Several waves of US sanctions pushed the company to the brink by the end of 2020 as it lost access to critical CMOS components. Huawei management has acknowledged that inventory reserves will not last very long and the company does not expect the sanctions to be lifted anytime soon. Huawei must find a new strategy to stay in business, but management has shared some details on the new plan.
It is clear that Huawei’s consumer business was hit hardest by the sanctions, and the company was forced to sell off much of its smartphone business towards the end of last year. Maintaining inventory reserves for millions of IC chips used in phones, which are sold in millions of units per month, while competing with Apple and Samsung was unrealistic.
Huawei’s new focus on the automotive industry announced at the event offers an alternative strategy to stay in a high-volume consumer market. Products for this market will need IC chips, but these will also need LIDAR and artificial intelligence software – areas where Huawei is less constrained by US sanctions. A week after the end of HAS2021, Huawei started selling Chinese-made electric vehicles equipped with its electric drive, autonomous driving technology and a version of its Harmony operating system. The first vehicle available for purchase is the Seres SF5, produced by Chongqing Sokon Industrial Group.
The company has no plans to exit the wireless and optical networking markets and these remain a top priority for Huawei. Inventory reserves for IC chips used in network systems can last another 6 to 12 months, and adding capacity using plug-in optics made by other vendors may be an option Huawei is considering. Another area of focus not subject to US sanctions is improving operational efficiency through automation using software and AI.
No new optical network products were announced at the event. Instead, the applications of the solutions introduced in the past 12-18 months have been highlighted by company experts and some Huawei customers. The focus was clearly on improving the performance of optics rather than silicon.
The figure below illustrates the benefits of upgrading optical networks using Super C band, carried out by Huawei customer in India. That’s impressive: a 300% increase in capacity with a 40% reduction in cost of ownership. Still, it relies on 200G optics – all made in-house at Huawei.
Improved network efficiency through the use of Super C band
Image source: Huawei
The first 400G deployments and demonstrations of 800G per wavelength optical transport technology were shown at HAS2021, but little was said about 400ZR, which is the hottest topic among Huawei’s competitors in 2021. The 400ZR’s low power budget requires new DSP chips, which Huawei can’t produce anytime soon.
Cisco paid $ 4.5 billion for Acacia this year to integrate 400ZR technology internally and touted the benefits of the 400ZR over its main routers at the company’s analyst event this week. Cisco’s vision is to scale down a DWDM / Router / Multilayer Switch optical network down to the IP layer and replace ROADMs with backbone routers. Huawei’s strategy is to take ROADMs to the next level with their Optical Cross Connect (OXC) technology.
Huawei’s Optix Supersite, announced at MWC2021 in Shanghai, is designed to reduce latency by extending the OXC-based network to PON OLTs. It is designed to enable service providers to increase revenues in the lucrative private OTN line market by expanding it from large enterprises to small and medium enterprises.
The full text of the research note is available to subscribers at: www.lightcounting.com.
LightCounting will release updated forecasts for 400G ZR / ZR +, WSS, PON and other optical technologies in its full market forecast report on April 29, 2021.
The current challenges and Huawei’s strategies to overcome them are just a subset of the many issues facing the optical communications industry, discussed in detail in the upcoming State of the Industry Report for LightCounting, which will be released in May 2021.