Chinese company Huawei Technologies Co. has seen its 5G business suffer due to restrictions imposed by the United States and other countries. But its booming software business throws a lifeline at the telecommunications giant.
Huawei’s group of companies has recently become its fastest growing division as the company’s handset sales plunge and it faces setbacks in its business with telecom operators. Several countries, led by the United States, have banned the use of Huawei equipment in 5G networks, and the United States has also imposed broad controls on the company’s use of American technology, blocking its acquisition. many advanced chips.
Huawei’s vast business division sells cloud services, software and infrastructure to businesses, governments and other institutions, and does not rely so heavily on foreign chips and other components. The division grew 23% in 2020 — the most recent year for which the company has reported financial results — supported by soaring growth in cloud computing revenue.
Huawei has become a major cloud computing competitor in China, with 17% of the market in the third quarter of last year, making it the country’s second-largest cloud service provider, according to market tracker Canalys. It was behind Alibaba Group Holding ltd.
whose share was 38.3%.
Additionally, Huawei said it has seen strong demand for technologies used in smart cities and other digital infrastructure services for businesses and governments.
Huawei executives said the company is shifting toward software, automobiles and other business areas that don’t require as many foreign chips. “Our overall strategy and specific initiatives are all developed to ensure that we can survive and grow while remaining on the entity list for a long time,” Eric Xu, a senior Huawei executive, said at a press conference l last year, referring to the United States. export restrictions.
Mr. Strumpf is a reporter for the Wall Street Journal in Hong Kong. He can be contacted at [email protected]
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Appeared in the print edition of March 14, 2022 under the title “A lifeline for Huawei”.