Huawei paid a hefty price over the last 3 years of US sanctions

Huawei Technologies Co. may be the crown jewel of China’s tech industry, but for the US, the company’s espionage, ties to the state, and 5G wireless equipment have previously – and still – represent a security risk. Whether Huawei was, in fact, spying and misusing data is a separate question, because, for the West, the rise of Chinese companies is viewed as linked to the Chinese government’s power and its brand of techno-authoritarianism.

Huawei paid a hefty price for years, because successive administrations in the US have regarded the Chinese giant as a national security risk, claiming that it has deep links with the People’s Liberation Army and that its technology could be used for spying. None of those allegations have been either proven by the US nor accepted by Huawei.

Soon enough, the American government banned Huawei’s wares at home and urged allies to ditch them from their 5g mobile networks. That move was followed by countless trade restrictions, which eventually hampered Huawei’s position as one of the fastest-growing mobile phone providers not just in China but in most parts of the world. 

By April 2022, Huawei’s rotating chairman Eric Xu Zhijun, amid threats of fresh US sanctions, shared that the company was bleeding at least US$30 billion in annual losses to its smartphone business. The upside is that, according to Xu, the company was already accustomed to working and living with the US Entity List by then.

New revelations.

Last week, the company’s founder, Ren Zhengfei, for the first time shared additional insights on the company’s progress in overcoming years of US sanctions. Ren revealed that in the past three years, Huawei has replaced more than 13,000 components in its range of products with local substitutes and redesigned over 4,000 circuit boards.

He delivered a speech during a February 24 seminar at Nanjing University to thank the public and academics who had participated in the company’s search for solutions to its technology predicament. According to a transcript of his speech published by Nanjing University on Friday, Ren said production of circuit boards has “stabilized” after the Chinese telecoms giant developed replacement parts from domestic sources.

He also shared that Huawei had spent US$23.8 billion on research and development in 2022. “After the US sanctions impacted its smartphone business, the company began looking for more opportunities in enterprise solutions, such as helping traditional industries to digitize their operations,” the South China Morning Post reported.

For context, Huawei, the world’s largest provider of telecommunications equipment, has been devoting more of its revenue to research for the development of new technologies as a way to derail crippling US trade and investment sanctions. In 2021, the tech giant’s R&D budget was US$22.1 billion — more than any company outside America. 

Ren said that that ChatGPT “is not something we will work on,” according to the transcript. But he believes Microsoft’s OpenAI will not be the only dominant player in the field. The opportunity generated by ChatGPT means the industry will need more computing power, which will create more demand for Huawei’s products, he added.