Huawei's Hu Hits Back

Huawei may be under pressure and scrutiny like never before, but that doesn't mean it's going to become a passive player as the communications networking sector enters a critical next-generation technology phase.

While most headlines focus on the arrest of its CFO Meng Wanzhou and its exclusion from business opportunities in an increasing number of major markets, the company has briefed multiple global news giants, including the Financial Times, Reuters and CNN, to remind everyone that it's the industry's biggest beast -- and getting bigger. (See Huawei CFO Posts Bail in Canada and China Slams Huawei CFO's Arrest, Huawei 'Not Aware of Any Wrongdoing'.)

According to the FT, the company's rotating CEO Ken Hu claimed that Huawei has won a slew of commercial 5G contracts, claimed a "clean" security record, noted that the company is on course to report annual revenues of more than US$100 billion and that "our customers continue to trust us."

Well, not all of them, it would seem. (See Orange Rules Out Huawei for 5G in France, Huawei Cut Out of BT's Mobile Core, Optical & Edge Plans and Where Huawei Fears to Tread.)

He also hit out at "efforts in some markets to create fear about Huawei" and political interference in business matters, adding that he was looking forward to a "just conclusion" to the CFO's current legal predicament. (See Anti-Huawei Forces Focus on Sprint/T-Mobile Deal .)

Reuters reported that Hu said the company would spend $2 billion during the next five years on cybersecurity to tackle concerns about its technology, and that the Huawei chief said the number of commercial 5G deals won by the company was now at 25.

Putting On a Brave Face
Ken Hu, Huawei's rotating CEO, at his company's Global MBB Forum in London last month.
Ken Hu, Huawei's rotating CEO, at his company's Global MBB Forum in London last month.

There's little doubt that Huawei is still the industry's leading player by revenues and one of the most important telecoms and IT technology influencers in the world. During the first six months of the year it recorded (unaudited) sales of almost $48 billion, up 15% year-on-year: That its full year revenues might be reported as topping $100 billion would not be a surprise. (See Huawei Shrugs Off Challenges With Surge in H1 Profit.)

But the current problems impacting Huawei won't have an impact on revenues until 2019 at the earliest and then into 2020 as 5G business really starts to ramp: That's when industry watchers and rivals will be looking for signs of slowdown or even business contraction, unless the company has already been hit by trade bans and restrictions before then, which is possible. (See How the West Can Hurt Huawei.)

What are the key technologies and processes that will underpin successful, full 5G deployments? Check out our 5G Big Picture Prime Reading report to find out.

Huawei may have already shipped tens of thousands of 5G basestations outside of China and lay claim to 25 commercial 5G contracts, which is indeed all testament to its strengths as a supplier and partner, but these are still very early days in the race for deals to provide next generation radio access network equipment and Ericsson, Nokia, Samsung and ZTE are all chasing deals in what is forecast by ABI Research to be a market worth $26 billion by 2023. (See Huawei Has Shipped 10K 5G Basestations Outside China.)

That, of course, is just the RAN part of the 5G market, which (as we keep banging on about) amounts to much more than just the radio access elements. Huawei is involved in pretty much every other part of the '5G puzzle,' so while there are many opportunities to win new or additional business there are also a lot of new challenges for Huawei in the current environment. (See Piecing Together the 5G Big Picture.)

As for the "clean" security record, there is certainly no evidence that Huawei has the much feared "back door" access code built into its products that would enable the Chinese authorities to spy on other countries' digital communications or shut down essential/critical services.

But that doesn't mean any security concerns are irrational -- years of reports linking Huawei to the Chinese government, no matter how strongly denied, cannot be wiped from people's minds and, like any other global superpower, China will do whatever it can to gather "intelligence" on other countries and major businesses. Perception counts for a lot.

In addition, tight security measures taken by national governments, which would include stringent risk assessments, would be enough to deter major network operators from deploying certain technologies for fear of losing lucrative government contracts: Even if an operator didn't regard Huawei as a security risk, if the national government of its home country identified the company as a potential risk, that would be cause enough for the operator to avoid doing business with the vendor.

Huawei has a large internal and external public relations team and right now they will be tasked with shifting the perception of Huawei as a security risk. Coverage of ongoing business success in the FT will be regarded as a step in the right direction but the battle to win the hearts and minds of decision-makers will take much, much more.

— Ray Le Maistre, Editor-in-Chief, Light Reading

Crystal01 1/25/2020 | 2:47:38 AM
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