Chinese infrastructure vendor Huawei is making big investments in research and development in hopes of improving upon its existing gear and solving problems that many of its telecom operator customers are facing. The company has been ramping up its R&D efforts over the past couple of years. In 2012 it spent $4.7 billion, or about 13 percent of total group revenue, on R&D. And in 2011, it spent $5.2 billion on R&D, a 34.2 percent increase over the prior year.
According to the Wall Street Journal, more than 10,000 engineers at Huawei's Shanghai R&D center are working on products that solve problems such as how to increase the capacity of a base station, how to move 3G network operators more cost effectively to 4G, and how operators can offer better quality of service to certain customers that will pay extra for that connection.
Huawei's R&D efforts appear to be paying off for the company, which is outpacing its rivals such as Sweden's Ericsson (NASDAQ:ERIC) and France's Alcatel Lucent (NYSE: ALU). In 2012 Huawei reported a 32 percent increase in net profit to $2.5 billion, while revenue jumped 8 percent to $35.47 billion. Huawei said it expects to grow overall revenue this year by 10 percent and that it also expects a 10 percent compound annual growth in revenue over the next five years.
In the U.S. market, Huawei sees little opportunity for its infrastructure business due to ongoing concerns about security. Nevertheless, the company has said it is more confident about its relationship with operators in Europe and other parts of the world. In September 2012, Huawei announced plans to spend a total of $2 billion on research and development as well as component procurement in the United Kingdom over the next five years.
In other Huawei news, Engadget reported that former Nokia (NYSE:NOK) sales executive Colin Giles is now executive vice president of sales and marketing at Huawei's consumer device business.
For more:
- see this WSJ blog post (sub. req.)
- see this Engadget report
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