What kind of company is Huawei?
Company Profile
Huawei‘s rapid rise has always been an unsolved mystery that the outside world is eager to explore. In just 20 years, Huawei has grown from a revenue of less than US$1 billion to a large company with a revenue of US$100 billion. In 1997, Huawei had just finalized its first export agreement with Hong Kong telecommunications company Hutchison Whampoa Group. Today, it is the largest supplier of communications equipment networks in the world and the second largest mobile phone brand in the world.
This rapid rise has made the United States wary. Western security officials allege that Huawei has close ties with the Chinese military and may secretly assist the Chinese People’s Liberation Army in espionage activities. They have banned Huawei from the country on the grounds of national security. In addition to prohibiting local acquisitions and online The removal of Huawei from bidding lists for equipment supply contracts has prompted allies to refuse to use Huawei’s 5G equipment, while Huawei has denied the accusations.
Not an ordinary company
Many people will doubt the title of my article. Is it too good to use “omnipotent” to describe Huawei? I have thought about the title of this article for a long time, and I still think that these four words are most appropriate to describe Huawei.
Can you name one company in the world that can make the United States feel like a thorn in its back? It makes it sleepless at night and wants to use all the efforts of the country to eliminate it quickly. All kinds of methods are used, including containment, sanctions, and bans. Luck, revenge, blacklisting, cutting off money flow, or even kidnapping the company’s second-largest person without trial?
As far as I know, no company in modern corporate history has ever won this honor. You can imagine the importance of this enterprise. The United States has discovered the signs of Huawei’s development. For the first time in history, the Department of Defense replaced the Department of Commerce to supervise Huawei. This is undoubtedly a strange thing in the international business community, but it also allows us to know that restrictions on Huawei had already begun.
Statement: If you have read this article and think what I said is untrue, you are welcome to leave a message and let me know which company still exists and is receiving the same treatment. I would like to thank you in this blog and admit my ignorance. And I will take the time to study another business case you proposed, and promise to write a special article for this business and publish it on this blog.
Leaderships
Ren Zhengfei
Huawei President Ren Zhengfei’s first job was as a technical researcher for the Chinese People’s Liberation Army. In 1982, he lost his job due to military personnel reductions. Therefore, it is rumored that his military background gave Huawei a unique relationship with the Chinese military. Ren Zhengfei is very optimistic about this. This is scoffed at. But there are signs that Ren Zhengfei has received support from high-level government officials. In 1994, he met briefly with Chinese Communist Party Chairman Jiang Zemin, and a few years later he helped the People’s Liberation Army build the first nationwide communications network.
Ren Zhengfei’s unique leadership style has led the company to its current scale. Employees regard him as an omnipotent grown-up
things. He has been described as “single-minded and ruthless”. Ren Zhengfei has only a basic understanding of the company’s technology and has little interest in technical details, but he manages more than 180,000 employees with an iron-fisted leadership style. Ren Zhengfei’s management style and rhetoric are full of military discipline. In a letter to employees, he once wrote, “Huawei’s just-started voyage needs thousands of heroes to row the oars,” and warned employees to overcome their weaknesses and shortcomings.
The following is a collection of his famous quotes:
- This era is advancing too fast. If we are complacent and stay here for only three months, we are destined to be erased from history.
- Bill Gates said that “Microsoft only has 180 days before death,” but Huawei will die tomorrow.
- Huawei achieved great success in 2019. First of all, thank you to Trump
- The United States is still the beacon of science and technology in the world and still needs to learn from advanced people.
- Huawei can survive without the United States
- Huawei PCB boards were questioned for installing spy devices. Ren Zhengfei said: With this level, I would still sell 5G
- Huawei must be number one in the world, but it may not survive if it is number two.
- Huawei is not recognized by the West, don’t complain
- Talent selection cannot be like selecting underwear models. What we want are warriors, not perfect flies.
- We never wanted to overthrow Cisco and Apple. I followed their banner. Why not?
He was also selected as one of Time’s 100 most influential people in the world in 2019.
Meng Wanzhou
At the instigation of the United States, Meng Wanxi, Huawei’s deputy director and chief financial officer, was detained in Canada on December 7, 2018. Meng has been charged with bank fraud and other crimes over allegations that she misled HSBC about the company’s operations in Iran to obtain banking services in violation of U.S. sanctions. Although Meng Wanzhou was detained in Canada for 1,028 days, Meng Wanzhou returned to China on the evening of September 25, 2021.
The detention of Meng Wanzhou changed the relationship between China and the United States, and of course it also changed Meng Wanzhou. According to media reports, Xi Jinping personally participated in rescue operations many times. When Meng Wanzhou returned to China, she was deserted when she got off the plane. She has since become a hero for Huawei and China.
Ren Zhengfei originally said that Meng Wanzhou did not have an engineering background and would not be able to rise to the next level and become the CEO of Huawei. In an exclusive interview with the British Broadcasting Company BBC in 2019, Ren Zhengfei pointed out that his daughter Meng Wanji has no technical background and will never be his successor. But after Meng escaped from Canada, she was immediately promoted to the rotating CEO of Huawei Group the following year.
Yu Chengdong
Nicknamed Crazy Yu, his catchphrase is that at Huawei product launches in recent years, he blurted out that Huawei’s products are “way ahead” of its competitors. He is probably the third most popular person in Huawei. He was so poor that he could hardly survive when he was a child. He only survived on the leftover milk from his neighbor’s wet nurse.
In 1996, just three years after graduating from Tsinghua University with a master’s degree, 27-year-old Yu Chengdong established Huawei’s wireless business department, which was also the predecessor of Huawei’s mobile business. Consumer businesses including mobile phones and smart cars were also born out of this.
No one in the leadership team has ever studied abroad
It may be hard for you to imagine that a company of this scale that emphasizes innovation and technology and sells its products to countries all over the world must compete with world-class technology giants at all times. None of the company’s leadership team members have studied abroad!
Patents
Applies for the most patents
The World Intellectual Property Organization (WIPO) released data on the 7th of this month, indicating that although the number of patent applications in China will decrease in 2023, it will still be the country with the most patent applications. Hong Kong’s “Sing Tao Daily” reported that among them, Huawei’s number of applications has also dropped significantly, but it is still as high as more than 6,000, and it is still the company that applies for the most patents in the world.
Started to charge
Huawei’s total patent licensing revenue in 2022 will reach 560 million US dollars. Huawei holds more than 120,000 valid authorized patents around the world; many commonly used mobile phones and telecommunications systems use Huawei’s patents. In the past, Huawei doesn’t charge any fees, but now it’s asking manufacturers to charge patent fees.
Business scope
| Segment | Scope | Rivivals |
| Space | Satellite Internet, mobile phone satellite calls | SpaceX, OneWeb, Blue Origin |
| Communication | Telecom equipment, switches, base stations, transmitters, communication equipment, satellite systems | Ericsson, Nokia, ZTE, Datang |
| Commercial | Enterprise communications equipment, switches, servers, storage devices | Cisco, Arista, Juniper, Broadcom, Lenovo, HPE, Zaier, Inspur |
| Consumer | Mobile phones, computers, tablets, wearable devices, watches, glasses | Apple, Samsung, Lenovo, HP, Zair, Xiaomi |
| Cloud computing | Artificial intelligence, cloud computing, large language models, enterprise software | Amazon, Microsoft, Alphabet, Alibaba, Tencent |
| Intelligent Automotive Solutions | Smart vehicles, self-driving vehicles, new energy vehicles | Tesla, NIO, Li Auto, Xpeng, Xiaomi |
| Digital energy | Clean energy, solar energy, energy saving, carbon neutrality | Tesla, New Century Energy, First Solar |
| Hisilicon | Semiconductor chip design | Qualcomm, MediaTek, Broadcom, Samsung, Apple |
Huawei published a report on optical communication system architecture and technology evolution at the Asia Communications and Photonics Conference (ACP2023) held in Wuhan in November 2023. Huawei also proposed the goal of space broadband: to build it in 2030 100Gbps interstellar light Internet.
This area will be the focus of the global technological hegemony in the future. For details, please see my two previous posts:
- “Low-orbit satellites (LOS) progress, relevant companies“
- “Smartphones that support satellite calls“
Cell phone Supporting Satellite Calls
As of September 10, 2023, there is only one smartphone on the market that supports satellite “calls” in the world. For details, please see my other previous article “Smartphones Currently Supporting Satellite Calls”.
Anti-eavesdropping
Quantum communication encryption
Huawei Mate60 Pro mobile phone cooperates with China Telecom Quantum Group. In November 2023, the “Huawei Mate 60 Pro Quantum Encryption Customized Terminal” was demonstrated for the first time at the Guangzhou 2023 Digital Technology Ecology Conference. This technology is passed through domestic chips. And the independently developed quantum security middleware completes the encryption and decryption of VoLTE voice data on the mobile phone side, which can effectively prevent calls from being monitored during network transmission.
Regarding quantum computing, for details, please see the explanation from my previous post”Quantum computing current progress and related stocks“.
De facto standard for non-US leaders
The first choice for important non-U.S. people because the U.S. government is accustomed to eavesdropping on the phones of important political and business leaders in other countries, and U.S. allies continue to install Trojans or use software to hack into mobile phones in various ways. Huawei’s mobile phones have become the best standard equipment for all those around the world who are worried about being eavesdropped by the intelligence services of the United States and its allies, tacitly and by word of mouth.
Telecommunications
Communication devices
Twenty years ago, when Huawei began to be known to Americans, it actually relied on cheap and efficient network communication equipment for general personal and commercial use at home and in companies.
At that time, Huawei will be able to provide Cisco’s full range of products at a price that is less than 30% off. Compared with Huawei, Cisco is no match at all. At that time, the United States became alarmed and began to ban Huawei from selling network communication products in the United States.
Telecommunications equipment
Once upon a time, twenty years passed. Currently, only a very small proportion of Huawei’s revenue from household and company network communication equipment is sold, but Cisco can still only sell household and company network communication equipment.
However, Huawei has been upgraded to become the world’s largest telecommunications equipment manufacturer. The only thing that has not changed is: Huawei’s telecommunications equipment is still 30% cheaper than its main competitors, and its functions are better than those of its competitors. If you are a customer, what will you do, regardless of political factors? choose?
While everyone was still talking about how to popularize 5G, Huawei was the first in the world to launch 5.5G in the third quarter of 2023, ahead of its competitors. After actual testing by users on the Internet, the 5.5G promoted by Huawei is indeed as promised, with a speed ten times that of 5G.
Software
AI
Huawei’s artificial intelligence Hi AI platform has been updated to version 3.0, which will support multi-terminal sharing of AI computing power, and device-side AI has officially become decentralized.
In terms of generative artificial intelligence, Huawei is the first echelon of Chinese enterprises. Pangu Large Model 3.0 is officially released. It does not write poetry, only does things, focusing on enterprise applications.
Harmony operating system
Harmony is currently the third largest mobile operating system in the world. According to Huawei data, the number of Harmony ecosystem (including automotive) devices exceeds 700 million and there are more than 2.2 million developers. Zhu Yonggang, President of Huawei Terminal Services, believes that after the release of HarmonyOS Next in 2024, the number of users will exceed 100 million within one year.
The launch of Harmony OS Next in Q1 of 2024 will completely break away from the Android ecosystem and will not support Android applications at all.
In addition to Hongmeng for mobile phones, the Hongmeng operating system for personal computers is almost completed, which is a more ambitious task.
Other software
Jufan Internet browsers, game programs, various mobile programs and Huawei’s own program store AppGallery.
In terms of traditional large-scale software capability indicators, Huawei has launched a new GaussDB database product on June 7, 2023. In 2023, Huawei even announced that it had completed the first large-scale switch of its self-developed MetaERP, involving 75 countries and 88 subsidiaries.
In 2022, some media even reported that Huawei has created its own programming language “Cangjie” after the Harmony system.
Chip
AI Chip
Huawei has been working hard to overcome restrictions since the United States imposed sanctions on national security grounds in 2019, cutting off Huawei’s access to advanced chip manufacturing tools and weakening its smartphone unit. Ascend 910B is widely regarded as China’s most competitive non-Huida artificial intelligence chip.
In terms of artificial intelligence-specific chips, Huawei’s Shengteng 910B chip is generally considered to be the most competitive artificial intelligence chip in the mainland market. With Huida’s products restricted, 910B has become very popular. The measured performance of 910B is better than that of Huida China’s special downgraded version H20. H20 lags behind 910B in FP32 performance, which is an important indicator of how fast the chip handles ordinary tasks. The initial price of H20 is US$12,000 each, but sales are said to be not as good as Huawei’s Ascend 910B chip.
This situation forced Huawei to prioritize the production of Ascend 910B chips, and even slowed down the production of its own Kirin 9000s chips used in the high-end Mate 60 mobile phone that brought Huawei back to life.
Nvidia’s top competitor
On December 6, 2023, Jensen Huang stated for the first time during his visit to Singapore: Huawei is very difficult to deal with. The company has listed Huawei as one of the main competitors for artificial intelligence chips that is “very formidable”.
On February 23, 2024, Nvidia identified Huawei as a top competitor in multiple categories including artificial intelligence chips for the first time in a filing with the U.S. Securities and Exchange Commission. Nvidia identified that China’s Huawei competes in the supply of artificial intelligence chips, such as GPU, CPU and network chips. Nvidia also positions Huawei as a cloud services company and has designed its own hardware and software to improve artificial intelligence computing.
Smart vehicles
According to Ren Zhengfei, Huawei spends more than one billion US dollars a year on vehicle research and development. Recently, Chinese media in particular have vigorously promoted self-driving solutions that do not require high-resolution maps (or high-precision maps). At the same time, it is also cooperating with Chinese car manufacturers to launch a car design called “Huawei Inside”. It is said that the Mercedes-Benz S series will put HarmonyOS-related applications (not HarmonyOS) into the car. Volkswagen is in in-depth discussions with Chinese car and machine developers. The Financial Times stated that Huawei is Fox’s top priority for cooperation with China.
Affected by Huawei’s halo, the cumulative orders for the AITO M7 jointly developed by Huawei and Cyrus have exceeded 60,000 units, far exceeding production capacity. In order to avoid losing customers due to long delivery times, Wenjie Auto has launched a compensation plan for overdue car delivery. As long as consumers who order the new M7 Plus and new M7 Max exceed a certain waiting period, they can receive up to RMB 10,000 subsidy.
Huawei announced in November 2023 that it would spin off its four-year-old “Intelligent Automotive Solutions” (IAS) business unit. This business of Huawei seeks to become the major supplier of software and components for smart electric vehicles. The unit will be valued at between $28 billion and $35 billion.
Financial Services
Huawei acquired CyberLink Pay in 2021 and became a 100% subsidiary of Huawei. It officially entered the mobile payment market. Since Huawei’s trademark resembles a flower, it was renamed Petal Pay so that consumers can understand it at a glance. It is also called Huawei Pay.
Huawei’s payment institution “Xunlianzhipay” has been renamed “Petal Payment” and will seize the payment business pie of Alipay and WeChat. Huawei stated that this move is to speed up the construction of the Harmony ecosystem. What Huawei needs to do is not only payment, but a full-scenario payment platform.
This is an important step in promoting Harmony Yuan services. Now major partners such as Didi, Meituan, Maoyan, and Tongcheng have all settled in the negative screen in the form of Yuan services.”
The report pointed out that Huawei Pay will be deeply integrated with the Harmony system. Huawei developers and partners can directly complete commercial closed loops in the Harmony ecosystem. Payment operations on multiple Huawei terminal devices can be transferred to mobile phones across devices, making it convenient and safe for users. Complete payment.
Huawei itself has long had a cooperative relationship with Alipay. Huawei announced in November 2022 that Alipay has officially connected to Harmony Ecosystem.
According to Huawei Device BG CEO Yu Chengdong, Harmony Ecosystem continues to welcome strong partners. Huawei is working with Alipay to explore more possibilities for atomized services based on Harmony operating system, allowing users to obtain services in a better way.
Capital market evaluation
Annual revenue
Huawei’s annual revenue in 2022 will be RMB 636.9 billion, approximately US$100 billion. In comparison, the same year:
- Taiwan’s largest listed company, TSMC, had annual revenue of US$75.01 billion that year.
- Huawei’s opponent twenty years ago was US$51.557 billion.
- The world’s second largest telecommunications equipment manufacturer after Huawei is US$26.91 billion.
- Intel is US$63.054 billion.
- Apple, the world’s largest listed company by market value, is worth US$394.33 billion.
According to December 29, 2023, rotating chairman Hu Houkun said that Huawei’s revenue in 2023 is expected to increase by at least 9% year-on-year. This is also after a series of unfavorable factors such as strong suppression by the United States, inflation, global stock markets falling into a bear market, and U.S. interest rate increases; Huawei’s annual revenue has returned to the level of RMB 700 billion for the first time since 2021.
Huawei’s valuation
Therefore, conservatively speaking, if Huawei goes public, its market value will be about one-quarter of Apple, which is US$700 billion. Huawei has 34 billion shares, and its share price is approximately US$20.6 per share.
A private company
Huawei is a company of this level in the world, and one of the few companies that is not publicly listed. There are many reasons: Most people think that the company is mysterious, but this is not the main reason at all. The founders set the direction from the beginning not to go public, but to share the company’s profits with the company’s employees through stocks.
Employee stock
In February 2022, the media reported that Huawei announced that it would pay dividends for 2021, which is expected to be 1.58 yuan (RMB, the same below) per share. Based on Huawei’s 2020 annual report, Huawei’s total share capital is about 34 billion shares. It will pay more than 50 billion as employee dividends. There are approximately 120,000 participants in the company’s employee stock ownership plan, and each person will receive more than 400,000 yuan.
Huawei internal employees also revealed that employee stock ownership is now distributed based on performance appraisals, and only employees with outstanding performance are eligible after two years of employment. Referring to the dividend distribution over the years, even if the dividend in 2018 was as low as 1.05 yuan per share, the rate of return exceeded 10%, which is better than most financial products on the market.
Related articles
- “Chinese apps are taking over the world, accounting for 33% of global downloads“
- “How does the all-powerful Huawei make money?“
- “TikTok, the rival of all social networks“
- “How does Pinduoduo make money, why it surpass Alibaba and become No. valuable listed Chinese companies in US?“
- “Failed Taiwan Software Industry Policy“
- “The hardware and software gap between China and US, is all China-made software and hardware possible?“
- “Low-orbit satellites (LOS) progress, relevant companies“
- “Smartphones that support satellite calls“
- “How does Boeing make money? Too big to fall“
- “Comac’s C919 officially flies commercially“
- “How does Lockheed Martin, the king of arms, make money?“
- “Quantum computing current progress and related stocks“
Disclaimer
- The content of this site is the author’s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.
- I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers’ direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.
