“The priority of Huawei is seeking survival” – Guo Ping
The US announcement of further trade restrictions against Huawei this weekend meant a radical shortening of the keynotes for the Global Analyst summit today. The US move, will have the effect of further disrupting supply chains to Huawei. It will also potentially herald a fragmentation of the global 5G standards.
Adversity is the mother of all invention
The existing restrictions on Huawei from last year have led to a 30% increase in R&D spending and an increase in inventory of 73%. Huawei were keen to emphasise that there had been no discontinuity or disruption in 2019 and they remained profitable. However, this latest set of restrictions is obviously seen as an existential threat. It is obvious that we should expect further increases in R&D from Huawei (and their Chinese suppliers) in the next year as they seek to get around these new restrictions. Whilst there is a short term pain, this need to diversify supply chain and innovate may in the long term make Huawei an even more powerful company worldwide.
Cooperation and standards remain critical
Huawei rightly pointed out that the current success in global wireless was driven by international cooperation, initially in Europe with GSM, and then beyond. The US’ separate early wireless path can be seen as leading to the current situation where there are no US vendors in the 4G network space. The investment case for 5G beyond a 4G+ is still to be made and the development of many of the value add aspects of 5G are still not finalised. Making these real requires continued international cooperation.