Last week, Huawei released their 2022 Annual Report. It seems the company is adjusting to what it calls “the new normal,” and is starting to show positive results. Huawei says the “crisis mode” is over as it focuses on growth. If that is true and it they can keep it up in 2023, this could be the start of a comeback. So, let’s pull the camera back and take a longer-term, historical perspective on Huawei and the wireless industry.
On one hand, Huawei has been struggling in crisis mode with things like the shutdowns from Covid-19 pandemic and US sanctions. On the other hand, its losses have leveled off and it has been getting stronger.
Will recovery continue with 2023 Huawei Annual Report?
Three areas the company focused on during the presentation were steady operations and performance growth in 2022, first time disclosure of industry specific financial dada for their five major business unites and its heavy investment into R&D and innovation, which is at an all-time high.
That all shows the company is finding its sea legs. The next real question is, what will the company look like one year from today when it issues its 2023 Huawei Annual Report. Will this mean the company will continue to stabilize their operations and building once again?
Pulling the camera back, we can look at this story as the long-lasting need of and transition to 5G wireless. And we are still in the very early stages of this new opportunity. As we move further ahead, that growth only becomes larger, more encompassing and more important.
5G still enormous growth opportunity
Huawei is a giant player in this field on a global basis. So, even though the U.S. and a few other countries are taking hands off approach, the vast majority of other countries, globally remain Huawei customers.
That is still an enormous growth opportunity for the company over the next decade and beyond. You see, it is both expensive and complex to change out one vendor for another in the world of 5G and wireless.
So, what are the challenges and growth opportunities for the larger wireless industry, 5G, 6G, Huawei and its global competitors moving forward?
Cloud, ICT infrastructure, power, intelligent automotive
In this report, Huawei says it is achieving stabilization and growth by optimizing its business portfolio and making it more resilient. The company is focused on the current 5G wireless marketplace and new industry challenges, which means new growth opportunities going forward.
This year, Huawei disclosed industry specific financial data for the first time. This includes information related not only to 5G and wireless, but to ICT infrastructure, Huawei Cloud, digital power, intelligent automotive solutions and more.
Huawei R&D continues to be strengthened by increasing annual investment. This is an important piece of the growth puzzle going forward.
Today, Huawei has a presence in many countries around the world. Those seeds are where future growth will come from.
The company also says that in 2022, it ranked fourth on the EU Industrial R&D Investment Scoreboard. That is impressive since this analyzed 2,500 companies.
In addition, its cross licensing and massive patent portfolio have become an important asset as they do business with 29 companies from China, US, Europe, Japan, South Korea and other countries and regions.
Huawei, Qualcomm, Ericsson, Nokia, NTT, Jupiter Networks in 5G, chips
Recent years have been tough for quite a few different reasons including the Covid 19 pandemic, weak economy and pushback from certain countries.
The good news is 5G remains a strong and growing sector. In fact, there are many other top competitors in the 5G wireless and chip space including Qualcomm, Ericsson, Nokia, NTT, Juniper Networks and many others in different segments.
Looking ahead, 5G wireless and chips remain important pieces of the pie for Huawei, as they are for all competitors.
As for 2023, it will continue to be challenging. Every competitor is facing what may be temporary slowdowns in some of their segments like traditional wireless, 5G and chips. Hopefully, this will not last forever.
Wireless growth 5G, AI, IoT, cloud, autonomous driving, healthcare
While 5G is not going away, this slowdown is causing competitors to shift to new areas for growth in order to keep investors happy.
Industry players see these new areas as having great potential for growth.
We are seeing wireless competitors move laterally to other, newer segments like AI, IoT, cloud, autonomous driving and healthcare technology.
Plus, AI with Chatbot technology like ChatGPT, GPT4, Bard and others will be a rapidly growing segment.
And remember, the wireless industry itself has several different sectors like consumers, business, government, enterprise, wireless carrier, wireless handset makers and more.
All of these sectors are real growth opportunities for Huawei and the rest of the wireless industry. I expect focus to continue on these growth sectors and to spread faster and further.
Huawei 5.5G takes 5G wireless faster and further to next level
While Huawei is focused on traditional wireless and 5G, it is also focused on expanding to 5.5G, which it says is the next level of industry growth over the next several years.
This is an important area to be focused on. This seems to be the direction the industry is taking. Huawei calls it 5.5G. Qualcomm is doing something similar, calling this effort 5G Advanced.
These are two different names focused on creating new levels of growth in the wireless industry, before we get to 6G.
As we continue to move forward, I think we will see other competitors take this same path, and also expand their core.
So, as the industry transitions to the next level, 5G and wireless only become more important. That’s why it is important to keep our eyes on all competitors as the wireless, 5G and chip space continues to grow.
As for Huawei, this annual report shows its recovery may have already begun. The company still has more ground to cover going forward, but it seems to be on the right track and making real progress.
If it can continue to show progress throughout 2023 and strengthen its recovery, Huawei may once again find itself solidly on the growth track once again.
