Months since its US ban, Huawei still managed to record a revenue of USD 122 Billion in 2019, which was an 18% leap over the previous year. The company CEO, Eric Xu also signaled a strategic and long-term survival in 2020. The big bet for the same seems to be counting on the future of 5G.
Huawei, as you may know already, is the leading manufacturer of network infrastructure. It’s inhouse chip division i.e. HiSilicon is reportedly piling up a core 5G equipment called Base Station. “What’s that?”, you may ask. Let’s answer that and you will get why Huawei is focussing on it.
High-speed 5G waves suffer from a big disability, which is that they can’t travel distances since they get easily blocked by ordinary obstacles like Buildings, trees, rain, etc. To mitigate this, certain short-range transceiver cum transmitters would be used. These intermediaries will connect your device to the central hub. This intermediary is what we have mentioned as the base station.
Huawei will thus play a significant role in the 5G setup and there’s a lot of stakeholders for its produce. Its chips are application-specific, which means created or written for a specific application/usage. They are not general-purpose and thus those heavily relied on it can’t very easily switch to a substitute.
Moreover, it’s only real competitors are Nokia Oyj and Ericsson AB. Although EU restraining Huawei should prove jackpot to the European rivals, things ain’t that easy. The reason is simple. Huawei is the industry leader and is known for – quality meets price. The other two will have a hard time scaling huge market demand, especially within time.
Post the U.S.-China tussle, things are not sailing well for US companies too. These companies argue cutting the ties with Huawei has effectively backfired them. For instance, American chip manufacturers like Xilinx, Micron Technology Inc., and Broadcom Inc. have suffered declining earnings due to this. Trump administration is still allegedly cornering Huawei by shackling its biggest chip partner TSMC.
But even with all that the company shows no sign of losing steam. It is said to have sold more than 50,000 Base Stations (without any U.S. technology) in Q4 2019.
Tim Danks, VP Risk Management & Partner Relations, Huawei, stated, “It’s still our intention to return to using U.S. technology. The longer Huawei goes without access to U.S. suppliers, the more unlikely it is to be able to return to using them.”