Just a few years ago, Huawei was riding high on the increasing success of its consumer and enterprise products. It was securing deals to deploy 5G networks worldwide, and it briefly reached the apex of the smartphone market with more shipments than either Samsung or Apple. Then, US sanctions brought it tumbling back to Earth. The Chinese megacorporation hasn’t given up, though. According to CEO Ren Zhengfei, Huawei has replaced and redesigned thousands of components in its products, allowing it to continue operating in the face of US sanctions.
Ren explained the company’s reaction to the sanctions at a recent address at Nanjing University. In the newly released transcript, Ren says that Huawei had to find local replacements for more than 13,000 components that it could no longer source because of the trade restrictions. In addition, it redesigned some 4,000 circuit boards for its products. It has also developed its own mobile operating system, Harmony OS. However, it’s technically not new—Harmony OS is a fork of Android with all the Google-y bits removed and replaced with Huawei services.
The result of all this work, according to Ren, is the stabilization of Huawei’s product portfolio. It hasn’t been cheap, though. The company spent $23.8 billion on research and development in 2022. Refreshingly, very little of that went to AI. When asked about ChatGPT, Ren noted that he believes Microsoft will not be alone at the top with its OpenAI partnership, but Huawei won’t be vying for the spot. Instead, he hopes to make products that help other companies develop and run AI applications.
Credit: Ryan Whitwam
In some markets, Huawei may never recover from the trade restrictions implemented in 2019 by the Trump administration. The US government cited Huawei’s close relationship with the Chinese government when it was added to the Commerce Department’s Entity List. A place on that list designates a company as an enemy of US interests and requires US companies to stop engaging in business with those entities. Even foreign companies that license US technology may be forced to abide by the US sanctions. This left Huawei starved for semiconductors, particularly the chips used in smartphones.
China has been moving to ramp up domestic production of semiconductors, but its efforts are years behind TSMC, which is headquartered just off the coast on the island of Taiwan. This has led to speculation that China could attempt to assert its claims of ownership over the island, but TSMC has sought to downplay the likelihood, pointing out that its facilities aren’t much good without the supply chain to support them.