Huawei looks to software, automotive to beat U.S. sanctions

Huawei Eric Xu
Huawei homed in on automotive and software as two key elements of its path forward. (Huawei)

Huawei outlined plans to invest heavily in autonomous vehicle technology and software, aiming to overcome the impact of U.S. sanctions on its mobile unit and secure its future through diversification.

During the Chinese vendor’s Global Analyst Summit, Huawei Rotating Chairman Eric Xu said 2021 would be a “challenging year” but also “the year when we start to form a clear development strategy” to move beyond simply trying to survive.

“Boosting business resilience is our top priority,” Xu said.

Huawei has faced an uphill battle in the face of a U.S. campaign targeting the company, which among other things has seen it hit with a trade ban in May 2019 and formally named a security threat by the Federal Communications Commission in 2020.

Notably, Xu said the company planned to sink more than $1 billion into research and development for its Intelligent Automotive Solution (IAS) business unit, stating the company was aiming to embed its technology in vehicles through partnerships with automotive OEMs. He added it had already signed deals with three car manufacturers to advance a new “Huawei Inside” business model, with the first products due out in Q4 2021.

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Though some Huawei competitors, including Xiaomi, have decided to build their own vehicles, Xu said the company determined “what is needed by the automobile industry is not Huawei-branded vehicles but ICT capabilities" to help existing manufacturers build better cars.

He added software would be central to its strategy in this market, noting “we still have to have a driver in today’s vehicle, but autonomous driving is about developing the future driver.”

Cloud

The company’s efforts to advance its software position will also extend to its cloud business.

Huawei Carrier Business Group CTO Paul Scanlan told U.S. media during a briefing cloud deployments are likely to have multiple hardware vendors, raising questions about “who’s going to manage that. That’s an interoperability problem, that’s a software-driven problem that requires very robust capabilities in software to be able to do that.”

“If you’re going to have real-time switching between data centers or between cloud providers, you need a lot of seamlessness and that’s why the software component is so important,” he said.

Xu noted an earlier effort to drive synergies by combining its cloud hardware and software business lines under a single cloud and AI unit created unforeseen complications. A recent decision to break up the division and move its server and storage products to a different department reflected its view that the “cloud business is more of a software business.”

“With this change we want to give more freedom and flexibility to the cloud business so the business can do what is right for the industry, so that we can see more revenue coming from the software and services business moving forward in our total revenue mix,” he said.

5.5G

Software and automotive advances aside, Xu said the company would also look for ways to repurpose existing assets to tackle new applications, for instance applying optical technologies used in communications to new optical display and fiber sensing products.

The goal, he said, is to “explore new industries on top of those technologies instead of dwelling on the existing domains.”

Xu said the company would continue to pursue several mobile initiatives, including development of advanced 5G standards, which Huawei dubbed 5.5G, as well as its Harmony OS. Scanlan noted its efforts around 5.5G would focus on addressing a heightened need for advanced uplink capabilities to enable more use cases.