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U.S. sanctions created big difficulties for smartphone business and created component shortage: Huawei CBG Chief
Recently, Yu Chengdong, CEO of Consumer Business Group at Huawei stated that after four rounds of US sanctions on Huawei, it creates difficulties in producing new products and running short on core components.
But, Huawei never gives up and still trying to overcome these issues. Amid US sanctions, the Chinese tech giant is still developing new smart products but many are suspended yet.
Additionally, he mentioned that the Huawei developer always innovated the products as per consumer’s needs and create high-quality goods to enhance the consumer experiences.
“Huawei’s Four rounds of sanctions in the United States have made our consumer business difficult. Seeking survival and development, this is the product we can still make. Our team has never forgotten to create high-quality goods, enhance the consumer experience, and truly create value for consumers!” said Yu
This story starts in May 2019, The United States government put a national security threat allegation on Huawei and added it into the entity-list so-called blacklist.
This listing results banned Huawei to purchase the core smart products components and also restrict the American-based companies to supply. It was observed that the whole scenario is done to pull down the Chinese tech giant.
Not only in the component section, but it also prohibited the major Google Mobile Services (GMS) for Huawei. It was difficult to find an alternative to GMS and Huawei give birth to Huawei Mobile Service (HMS).
However, Huawei was still working with Android as it an open-source project and started launching its new products with Android and HMS as a replacement for GMS.
The major part of any smart device is its processor and the American govt seized the license of many chipmakers including Intel and dozens of others to continue business with Huawei.
Eventually, the company has started facing a 5nm chipset shortage for Kirin processors, which will be the main reason behind the delay of new smart devices. In past months, some chip makers received the license to supply Huawei but only 4G components.
On the other hand, it was reported that Huawei has stocked some Kirin 9000 processors for its upcoming flagship products and trying to resolve these chipset issues ASAP.
According to the information, the effect of the US-China trade war was clearly visible throughout 2020. For a whole year, 330 million smartphone units were shipped, which has a decline of 11%. Last year, the performance of Huawei was rapidly decreased as well as the overall market recovery was stalled.
Aside from smart products, Huawei has stepped into the smart car industry and started collaborating with car manufacturing brands to equipped Huawei’s technologies in them and made a new way to originate profit for the company.
Previously, Huawei said it needs to build the car to make money, the spare parts technologies are good enough. We just want to see the tigers fight from the mountain top, we don’t build cars.
Why Huawei is not launching 5G phones? The Huawei chief answered questions on this matter, saying that the company awaits a U.S. supply license to bring 5G phones.
Xu Zhijun said that Huawei is waiting for the U.S. department of commerce’s license to get 5G technologies for new phones and launch them among consumers.
Entity List:
Back in 2019, Huawei was enlisted in the U.S. commerce department blacklist. Since then, the company cannot buy new technologies for its smartphones such as chips and Google services. Huawei also lost access to its own Kirin chipsets, as the TSMC also denied printing new ones.
That’s why, the lack of 5G RF and chip components barred the company from producing 5G phones. This forced Huawei to build only 4G devices. Its recent flagships including P60 and Mate X3 also come with only 4G access.
Xu Zhijun says that the smartphone business is mostly affected by the U.S. sanctions and it caused a massive drop in Huawei’s smartphone market share. With current access to 4G chips, Huuawei can only make 4G smartphones, he mentioned.
4G:
Despite these questions, Xu confidently said that there are people who are willing to still buy a 4G phone. As Huawei has greatly improved its camera, foldable screen, and other parts of its devices.
To cover up, Huawei’s latest flaghip is opened with big demand in China, and Huawei pre-selling a good amount of units ahead of an official sale. Without 5G, Huawei phones are focusing on other aspects of user experience such as build quality and better software features.
Last year, Xu Zhijun stressed that 5G is a big issue for Huawei devices but the company will not give up on its mobile business. At that time, Mr. Xu also expected a recovery from this loss may take several years.
Huawei is currently working on the next generation of mobile network technology called 5.5G. However, the Chinese tech maker said that future smartphone consumers won’t buy new phones without 6G technology.
The latest statement made by Huawei’s Rotating chairman comes after the 2022 annual business report. He said that Huawei will deploy 5.5G around the world somewhere in 2025.
This next-gen network technology will improve the user experience from various perspectives. Also, it will revolutionize the digitalization of all businesses.
6G:
However, the Huawei chief also talked about 6G. Xu explained that no one knows about 6G and currently, it’s just a concept.
Meanwhile, it’s a goal for the industry and Huawei is working with industry partners to define 6G along with its research and development.
The Huawei chief then turned his view on the future of 6G. He told that 6G will be unnecessary in the face of low innovation and then, maybe we can live with 5.5G technology for a long time.
The Huawei chief elaborates that the company still hopes that the future network will arrive otherwise, there will be no growth in the mobile network and as a result, users will not buy new phones without 6G.
He also pointed out the current decline in the smartphone market and that there’s a large space left to be filled with innovation.
“Everyone still hopes that 6G will come, but whether it will come and when it will come, we still have to wait for the answer,” said Xu Zhijun.
For an expected timeline, Mr. Zhijun said that people waiting for 6G will have to wait, as it should come up by 2030. There’s a lot more to know about this new mobile network, as there are many countries that are still struggling with 5G installation.
During the 2022 Annual Business Report, Huawei CFO and Next Rotating Chairwoman, Meng Wanzhou said that Huawei will continue to operate in the hardest difficulties and the company will never give up.
Mrs. Meng will take over Huawei as the rotating chairwoman on April 1st, as it will be her first tenure as Huawei’s top leader. Meng Wanzhou said as long as Huawei continues to struggle, every minute of our time and every effort will not be wasted, we will never give up.
“We may not be able to succeed but we live to death, how can we not be benevolent?” she added.
These are pretty strong words from the Huawei leader as she remains optimistic for a bright future.
Results:
Huawei says its operation is now stable and the company has achieved global sales revenue of 642.3 billion yuan, while a net profit of 35.6 billion yuan. From this Huawei’s carrier business, enterprise business, and device business gained sales revenue of 284 billion yuan, 133.2 billion yuan, and 214.5 billion yuan respectively.
In 2022, R&D invested 161.5 billion yuan, accounting for 25.1% of the company’s entire 2022 revenue. On the flip side, the cumulative R&D expenses invested in ten years will exceed 977.3 billion yuan.
During the press note, Xu Zhijun, Huawei’s current rotating chairman, said that 2023 is a critical year for Huawei’s survival and development.
Xu Zhijun said that the upcoming year and the following are critical for Huawei. The key direction of Huawei’s strategy is to create growth opportunities, enhance development resilience, build differentiated advantages, win by quality, and ensure high-quality business continuity and product competitiveness.
He also mentioned that Huawei should seize the opportunities of digitalization in all walks of life to achieve effective growth. Huawei will also get advantages of its industrial portfolio and strong resilience, and strive to build a foundation for the digital economy and promote green and sustainable development.
In the face of challenges, Huawei is working with its partner to overcome difficulties.
