Huawei, US sanction, cloud computing
Source: Adobe Stock
  • China-based telecommunications giant, Huawei, still tops global telecom equipment sales despite market share falls sharply in Europe and the U.S.
  • The Chinese company is still far away from obtaining the essential technologies to surpass the U.S.
  • Huawei pivots to software and the Internet of Things to breakthrough the semiconductor limitations.

Last September, the U.S. barred Huawei from obtaining critical U.S. technologies. Nine months have passed since the U.S. blacklisted Huawei over alleged espionage. And not all segments that Huawei is involved in went downhill, new areas of focus, such as cloud computing and software, are booming.

Telecom

According to Dell’Oro Group’s report, Huawei leads the global market at 31% in year 2020 which grew by 3% from the previous year. This results from China being the fastest in rolling out 5G infrastructures and further boosting 5G equipment vendors’ market share. A report from ResearchAndMarkets shows that the top three Chinese telecommunication giants combined shares a total of 819,000 5G base stations and accounts for 70% of the world’s total. Huawei is followed by Ericsson which takes the market share by, and Nokia, taking up. 

However, Ericsson and Nokia have both gained share outside of China, improving from 35% to 40% and 25% to 30% of the overall RAN market, respectively. But the game doesn’t end there, by the end of June, a Swedish court had upheld plans to rule out Huawei selling 5G network gears in the country, smashing the hope for the Chinese tech giant re-entering Europe. The incident may further induce retaliation and government pressure by China to ban the Swedish telecommunication service provider, Ericsson. Needless to say it has also become harder for Ericsson and Nokia to expand in China.

Cloud Computing

Meanwhile, Huawei’s hardware segment is being hit the hardest from the U.S. sanctions, smartphone market share had plunged to 8.6% in the fourth quarter last year, which nearly halved from 15.2% in 2019. HiSilicon, the semiconductor design division of Huawei had dropped out of the top 15 semiconductor company ranking in the first quarter of 2021, according to IC Insights. HiSilicon entered the top 10 rankings in 2020 before the U.S. sanctions took place which prohibited the company’s access to TSMC chips.

Currently, the U.S.-based Cadence holds the world’s most advanced chip designing tools and Taiwan-based TSMC has the most advanced chip manufacturing process node technologies. Semiconductor chip technology is Huawei’s Achilles’ heel. As a result, Huawei is targeting the Internet of Things for a breakthrough. The chips used for IoT are required to have a stronger connection ability rather than extremely fast computing speed. The tech giant has also been investing largely in building data centers around China, incorporating AI, big data, and cloud computing to realize smart city infrastructures. Huawei also launched the new HarmonyOS system, which allows cars and house appliances to connect, similar to a Google-like system.

Under Biden’s administration, the competition is directed towards a new direction, and whether this new deployment would become effective will need further observations.

 

 

Source: Wealth Magazine, cnbc