Huawei is trapped in the trade war between the US and China while it remains at the forefront of 5G technology research and development and tries to show everyone that it has no intention to spy on its users for the Chinese government.
The company has invested several billion dollars in 5G research in the last 10 years. Development started in 2009 and only now will it start to generate an income. The duration of the research also explains why the Chinese company is ahead of its main competitors, namely Ericsson and Nokia.
Today, Huawei is the producer of 20 percent of the world’s communication devices and its share will probably increase after the deployment of 5G connectivity.
A history of growth
Huawei started 32 years ago as a manufacturer of electronic devices for companies based in Hong Kong. It was founded by Ren Zhengfei in 1987 with a capital of USD 3,500. In 1992 it started to develop on the domestic market and it began its global expansion after 2000.
It reached USD 100 billion in sales in 2018, and this year it will surpass that number after it made USD 84 million in the first 9 months. The company has been divided into several business lines and it has become an international giant. It has operations in over 170 countries and around 188,000 employees from 160 different nations.
Huawei is the second biggest smartphone producer in the world, after Samsung. It sold 200 million phones in 2018, overpassing Apple, and has already sold 185 million terminals in the first 9 months of 2019. It estimates sales of 240,000 smartphone units this year. Normally, it sells half of its phones in China and the other half goes to countries all over the world. But the ratio may change after the US banned the use of its equipment; Gartner data for the last trimester show that only 40 percent of its sales were outside China.
Yet the company has some of the best phones on the market today, in terms of both performance and camera features. The advantage Huawei has is that it uses its own chips, Kirin, and builds the terminals in its own factories.
As Huawei spokesman Joe Kelly says, it is easier for a company that owns all the production stages to make a phone or other device. While Apple spends 18 months on the drawing board before it gets to the final product and Samsung needs 12 to 15 months, Huawei only needs 9-10 months. This means it can come onto the market with the latest technologies quicker and explains why Apple is now the last to bring features that are 6-12 months old to their phones.
The appetite for the latest technologies can be seen in high-end phones like the foldable one, which was recently launched in China. At a price of EUR 2,500, the phone was sold out in the first minute. Around 30,000 foldable terminals were available.
Romania, Poland and Estonia have signed 5G memorandums with the US government regarding 5G connectivity security. The document does not specify any names of Chinese producers like Huawei or ZTE, but it is clearly positioned against them. Romania has yet to start its tender for the new 5G frequency spectrum, and it still hasn’t turned the memorandum into law. The country is waiting for the European Union to finalise the 5G ”toolbox”, where some new security measures are expected.
Talking about the US ban, Huawei Vice President Catherin Chen said that it can’t be a security issue.
“Over the past 30 years, Huawei has had a very good track record in securing equipment. We have provided services to 3 billion users in over 170 countries and regions and this history speaks for itself. If we’re asked whether there is any ‘backdoor’ found by any government or any hacking organization in Huawei equipment, the answer is no. Has there been any major incident caused by our computers? No, never,” says Catherine Chen.
The Trump administration has a problem with 5G network development. The US has no domestic 5G developers; the biggest the world are Huawei, Ericsson and Nokia. Samsung, ZTE and other small producers are also involved in the field, but none are American. Banning Chinese developers will increase the cost of 5G infrastructure by 50-60 percent and they will still not be “in control” of the equipment. In Europe, Romania included, banning Huawei would also reduce competition and increase costs by 30 percent, and that is a situation no one wants to see.
“The European Union has also issued a document on the security of 5G networks, which proposes setting up high cyber security standards and verification tests. I fully support these approaches because these measures are fact-based and could bring better control over these cyber threats,” said the Huawei Vice President.
“We will invest even more in cybersecurity and related technologies. We have already decided to invest USD 2 billion to strengthen our software and hardware capabilities. If there are countries that are concerned about cyber security, I said that we were open to signing agreements with these governments to ensure that our network has a high level of integrity. Apart from these kinds of agreements, we have offered to be tested and evaluated by other governments. So far, we have agreed to this type of cooperation on cybersecurity evaluation with the governments of Germany, Brussels, and Canada,” said Catherine Chen.
The company estimates that Romania would lose EUR 6.7 billion and 7,100 jobs if it banned Huawei from its 5G infrastructure. The company has 2,100 employees in Romania, from a total of 12,200 employees in Europe. It has a Global Service Center in our country, which is considered to be one of Huawei’s two most important pillars in Europe, alongside Germany. Indirectly, it has created 5,000 jobs in Romania. The sales of the Huawei group in Romania go up to RON 1.8 billion.
“I am very confident that things will not go in this hypothetical direction (banning Huawei in Romania, Ed.), because such a decision would have to take into account the technological development, the welfare of consumers, as well as the competitive cost of the tariff plans,” said Catherine Chen.