Huawei, a ruthless force that does not allow itself to be destabilized by sanctions

Potential exile in Germany, preparation of new sanctions in the US… The noose is tightening around Huawei and its mobile technologies. Is that enough to destabilize a company that said in early January that it had recovered from U.S. sanctions that have kept it stuck since 2019?

Huge booth at MWC 2023

That would be an understatement for the Chinese giant, which showed strength at this year’s Mobile World Congress in Barcelona. Of his 11,000 m2 stand (the largest at the show), less than 10% was dedicated to consumer activity, which was heavily impacted by US sanctions. A few years ago they were still presenting their showcase.

The Chinese group traditionally invests at least 10% of its income in research and development. In 2021, these investments even reached a record 22%, including 10% in basic research. “Innovation allows us not to depend on the market. It is because of this that we were able to bounce back,” explains Mingang Zhang, Deputy CEO of Huawei France, a subsidiary that celebrated its 20th anniversary last February.

Cloud, AI, Energy, Automotive

In 2021, the group’s revenue fell by 29% to 92 billion euros. Sales of its smartphones fell by more than 50%, leaving the manufacturer at the bottom of the rankings as it climbed into the top three in the world, head to head with Samsung. However, the company remained profitable (16 billion euros in profit) and eventually stabilized its turnover, and its boss said in early 2023 that he was out of “survival mode”. “American restrictions are our new normal, business is back on track,” the president said in his vows, a little boastfully.

Huawei has succeeded due to its diversification. Sales of solutions for companies (cloud, IA, etc.) grew by 30% between 2021 and 2022. The group looks to two main growth drivers for the future: photovoltaics (an equipment manufacturer produces inverters that convert current, AC solar panels) and automotive (it develops smart systems for electric and grid-connected vehicles).

Huawei has yet to say its final word on 5G

When it comes to 5G, Huawei is far from having its last word. The equipment manufacturer is indispensable in the global market. He multiplied the announcements at MWC 2023 by focusing on “5G advanced,” this evolution of current 5G technologies he calls “5.5G” to make it clear that he is at the forefront of new connectivity. It’s also present on private 5G networks, and not just in China (where it’s equipping a fully connected factory for home appliance maker Midea, among others). In particular, it installed a 5G network in the East West Gate port in Hungary.

The group is also due to open a 5G base station plant near Strasbourg this year… the first outside of China to employ 300 people. In France, Huawei employs about 1,200 people, including 300 researchers at its 5 R&D centers, who work in design, mathematics, imaging, algorithms, and sensors. The company also has a center for fundamental research in mathematics. 5G currently accounts for less than 10% of the turnover (930 million euros) of the French subsidiary.

Huawei uses its research-generated intellectual property to sell its patents in the form of licenses. “More than 30% of 5G patents are Huawei patents,” says Mingang Zhang. In particular, the company has a licensing agreement for 5G technologies with Oppo. In general, this licensing activity is a source of additional income for Huawei, which attracts more and more customers in the automotive industry (Renault, Audi, Mercedes, BMW, Porsche). The group’s annual results will be published at the end of March.

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