Huawei Shifts its Focuses on Cloud Computing as the U.S. Bans its Smartphones and Telecoms Businesses
In recent months, Huawei, a Chinese multinational technology company, has directed its focus more on its budding cloud business. Huawei’s cloud business is its only arm which has access to U.S. chips despite all sanctions against the company.
Its cloud computing business sells computing power and storage to several leading companies in China. However, the company is still behind Alibaba and Tencent. In January, Huawei’s unit reported a rapid growth which was equal to its smartphones and telecoms equipment businesses.
A person at Huawei familiar with the strategy said “We will continue to provide customers with a package of [cloud] services and products. The quality of the chips in it may not be as good as before, but for the other products that are not impacted, we will offer something with a little better quality, and the customers can accept it.”
In the face of a US ban, a change in focus was needed as Huawei’s smartphone and other consumer products unit was suffering and will choke off its access to mobile chips. Last year alone, its consumer unit was responsible for half of its $122bn revenue.
Meanwhile, according to industry executives suppliers of semiconductors needed in cloud computing and were still allowed to ship to Huawei. Other components were available on the open market.
Last year, Huawei was added to a list of companies barred from doing business with the U.S. by the US Department of Commerce. Hundreds of enterprises applied for a temporary license which will exempt them from the ban. Despite rules prohibiting the sale of any chip designed or manufactured using US technology, those licenses remain in force.
However, as the Department of Commerce didn’t publicize which companies receive licenses, some chipmakers with fabrication plants got licenses. Intel is one company that has confirmed that it has received licenses to ship to Huawei.
“Channels such as WPG have those on offer,” said YC Yao, a chip analyst at Trendforce, the industry research firm. “I do not think that such transactions could be monitored to the extent that you could prevent sales to a particular end-customer such as Huawei.”