Huawei Technologies Co., Ltd. (/ˈhwɑːˌweɪ/; simplified Chinese: 华为; traditional Chinese: 華爲; pinyin: About this soundHuáwèi) is a Chinese multinational technology company. It provides telecommunications equipment and sells consumer electronics, smartphones[4] and is headquartered in Shenzhen, Guangdong.
The company was founded in 1987 by Ren Zhengfei. Initially focused on manufacturing phone switches, Huawei has expanded its business to include building telecommunications networks, providing operational and consulting services and equipment to enterprises inside and outside of China, and manufacturing communications devices for the consumer market.[5][6] Huawei has over 194,000 employees as of December 2019.[7]
Huawei has deployed its products and services in more than 170 countries.[8] Huawei overtook Ericsson in 2012 as the largest telecommunications-equipment manufacturer in the world,[9] and overtook Apple in 2018 as the second-largest manufacturer of smartphones in the world, behind Samsung Electronics.[10] In December 2019, Huawei reported that its annual revenue had risen to US$121.72 billion in 2019.[11]
Although successful internationally, Huawei has faced difficulties in some markets, due to claims of undue state support and cybersecurity concerns—primarily from the United States government—that Huawei's infrastructure equipment may enable surveillance by the Chinese government.[12] With the development of 5G wireless networks, there have been calls from the U.S. to prevent the use of products by Huawei or fellow Chinese telecom ZTE by the U.S. or its allies. Huawei has argued that its products posed "no greater cybersecurity risk" than those of any other vendor and that there is no evidence of the U.S. espionage claims.[13] Nonetheless, Huawei pulled out of the U.S. consumer market in 2018, after these concerns affected the ability to market their consumer products there. Questions regarding Huawei's ownership and control as well as concerns regarding the extent of state support also remain.[12]
In the midst of an ongoing trade war between China and the United States, Huawei was restricted from doing commerce with U.S. companies due to alleged previous willful violations of U.S. sanctions against Iran. On 29 June 2019, U.S. President Donald Trump reached an agreement to resume trade talks with China and announced that he would ease the aforementioned sanctions on Huawei. Huawei cut 600 jobs at its Santa Clara research center in June, and in December 2019 founder Ren Zhengfei said it was moving the center to Canada because the restrictions would block them from interacting with US employees.
According to the company founder Ren Zhengfei, the name Huawei comes from a slogan he saw on a wall, Zhonghua youwei meaning "China has promise" (中华有为, Zhōnghuá yǒuwéi), when he was starting the company and needed a name.[16] Zhonghua or Hua means China,[17] while youwei means "promising/to show promise".[18][19] Huawei has also been translated as "splendid achievement" or "China is able" which are possible readings to the name.[20] In Chinese pinyin, the name is Huáwéi,[21] and pronounced [xwǎwéi] in Mandarin Chinese; in Cantonese, the name is transliterated with Jyutping as Waa4-wai4 and pronounced [wȁːwɐ̏i]. However, pronunciation of Huawei by non-Chinese varies in other countries, for example "Hoe-ah-wei" in the Netherlands.[22] The company had considered changing the name in English as it was concerned that non-Chinese may find the name hard to pronounce,[23] but decided to keep the name, and launched a name recognition campaign instead to encourage a pronunciation closer to "Wah-Way" using the words "Wow Way".[24][25]
History
Early years
During the 1980s, the Chinese government tried to modernize the country's underdeveloped telecommunications infrastructure. A core component of the telecommunications network was telephone exchange switches, and in the late 1980s, several Chinese research groups endeavored to acquire and develop the technology, usually through joint ventures with foreign companies.
Ren Zhengfei, a former deputy director of the People's Liberation Army engineering corps, founded Huawei in 1987 in Shenzhen. The company reports that it had RMB 21,000 in registered capital at the time of its founding.
Ren sought to reverse engineer foreign technologies with local researchers. At a time when all of China's telecommunications technology was imported from abroad, Ren hoped to build a domestic Chinese telecommunication company that could compete with, and ultimately replace, foreign competitors.[26]
During its first several years the company's business model consisted mainly of reselling private branch exchange (PBX) switches imported from Hong Kong.[5][27] Meanwhile, it was reverse-engineering imported switches and investing heavily in research and development to manufacture its own technologies.[5] By 1990 the company had approximately 600 R&D staff and began its own independent commercialization of PBX switches targeting hotels and small enterprises.[28]
The company's first major breakthrough came in 1993 when it launched its C&C08 program controlled telephone switch. It was by far the most powerful switch available in China at the time. By initially deploying in small cities and rural areas and placing emphasis on service and customizability, the company gained market share and made its way into the mainstream market.[29]
Huawei also won a key contract to build the first national telecommunications network for the People's Liberation Army, a deal one employee described as "small in terms of our overall business, but large in terms of our relationships".[30] In 1994, founder Ren Zhengfei had a meeting with Party general secretary Jiang Zemin, telling him that "switching equipment technology was related to national security, and that a nation that did not have its own switching equipment was like one that lacked its own military." Jiang reportedly agreed with this assessment.[5]
In the 1990s Canadian telecom giant Nortel outsourced production of their entire product line to Huawei.[31] They subsequently outsourced much of their product engineering to Huawei as well.[32]
Another major turning point for the company came in 1996 when the government in Beijing adopted an explicit policy of supporting domestic telecommunications manufacturers and restricting access to foreign competitors. Huawei was promoted by both the government and the military as a national champion, and established new research and development offices.[5]
Foreign expansion
In 1997, Huawei won a contract to provide fixed-line network products to Hong Kong company Hutchison Whampoa.[29] Later that year, Huawei launched its wireless GSM-based products and eventually expanded to offer CDMA and UMTS. In 1999, the company opened a research and development (R&D) center in Bangalore, India to develop a wide range of telecom software.[28]
In May 2003, Huawei partnered with 3Com on a joint venture known as H3C, which was focused on enterprise networking equipment. It marked 3Com's re-entrance into the high-end core routers and switch market, after having abandoned it in 2000 to focus on other businesses. 3Com bought out Huawei's share of the venture in 2006 for US$882 million.[33][34]
In 2005, Huawei's foreign contract orders exceeded its domestic sales for the first time. Huawei signed a Global Framework Agreement with Vodafone. This agreement marked the first time a telecommunications equipment supplier from China had received Approved Supplier status from Vodafone Global Supply Chain.[35][non-primary source needed] Huawei also signed a contract with British Telecom (BT) for the deployment of its multi-service access network (MSAN) and Transmission equipment for BT's 21st Century Network (21CN).[citation needed]
In 2007, Huawei began a joint venture with U.S. security software vendor Symantec Corporation, known as Huawei Symantec, which aimed to provide end-to-end solutions for network data storage and security. Huawei bought out Symantec's share in the venture in 2012, with The New York Times noting that Symantec had fears that the partnership "would prevent it from obtaining United States government classified information about cyberthreats".[36]
In May 2008, Australian carrier Optus announced that it would establish a technology research facility with Huawei in Sydney.[37] In October 2008, Huawei reached an agreement to contribute to a new GSM-based HSPA+ network being deployed jointly by Canadian carriers Bell Mobility and Telus Mobility, joined by Nokia Siemens Networks.[38] Huawei delivered one of the world's first LTE/EPC commercial networks for TeliaSonera in Oslo, Norway in 2009.[28]
In July 2010, Huawei was included in the Global Fortune 500 2010 list published by the U.S. magazine Fortune for the first time, on the strength of annual sales of US$21.8 billion and net profit of US$2.67 billion.[39][40]
In October 2012, it was announced that Huawei would move its UK headquarters to Green Park, Reading, Berkshire.[41]
In September 2017, Huawei created a NarrowBand IOT city-aware network using a "one network, one platform, N applications" construction model utilising IoT, cloud computing, big data, and other next-generation information and communications technology, it also aims to be one of the world's five largest cloud players in the near future.[42][43]
In April 2019, Huawei established Huawei Malaysia Global Training Centre (MGTC) at Cyberjaya, Malaysia,[44] which is Huawei's first training centre outside of China.
In September 2019 Huawei filed a defamation lawsuit against a French researcher and a television show which had hosted her.[45] The researcher, with the Foundation for Strategic Research, had noted that Ren Zhengfei was a former PLA member and that Huawei functions as an arm of the Chinese government.[46] This was the first time Huawei had sued a researcher for defamation for stating common opinions and recognized facts.[47]
Recent performance
As of the end of 2018, Huawei sold 200 million smartphones.[48] They reported that strong consumer demand for premium range smart phones helped the company reach consumer sales in excess of $52 billion in 2018.[49]
Huawei announced worldwide revenues of $105.1 billion for 2018, with a net profit of $8.7 billion.[50] Huawei's Q1 2019 revenues were up 39% year-over-year, at US$26.76 billion.[51]
In 2019, Huawei reported revenue of US$122 billion.[52]
Political controversies
Huawei has been at the center of espionage allegations over Chinese 5G network equipment. In 2018, the United States passed a defense funding bill that contained a passage barring the federal government from doing business with Huawei, ZTE, and several Chinese vendors of surveillance products, due to security concerns.[53][54][55]
On 1 December 2018, Huawei vice-chairwoman and CFO Meng Wanzhou,[56] daughter of company founder Ren Zhengfei, was arrested in Canada at the request of U.S. authorities. She faced extradition to the United States on charges of violating sanctions against Iran.[57] On 22 August 2018 an arrest warrant was issued by the U.S. District Court for the Eastern District of New York.[58] Meng was charged with "conspiracy to defraud multiple international institutions", according to the prosecutor.[59] The warrant was based on allegations of a conspiracy to defraud banks which were clearing money that was claimed to be for Huawei, but was actually for Skycom, an entity claimed to be entirely controlled by Huawei, which was said to be dealing in Iran, contrary to sanctions. None of the allegations have been proven in court.[60] On 11 December 2018, Meng was released on bail.[61]
On 28 January 2019, U.S. federal prosecutors formally indicted Meng and Huawei with 13 counts of bank and wire fraud (in order to mask sale of U.S. technology in Iran that is illegal under sanctions), obstruction of justice, and misappropriating trade secrets.[62][63] The Department also filed a formal extradition request for Meng with Canadian authorities that same day. Huawei responded to the charges and said that it "denies that it or its subsidiary or affiliate have committed any of the asserted violations", as well as asserted Meng was similarly innocent. The China Ministry of Industry and Information Technology believed the charges brought on by the United States were "unfair".[64] In November 2019, Huawei announced that it will pay RMB2 billion (US$286 million) in bonuses to its staff, and double their October salaries, as a reward for their efforts to counter the effect of recent U.S. trade sanctions on their supply chain.[65]
Shortly after Meng's detention, Chinese authorities arrested Canadian former diplomat Michael Kovrig and consultant Michael Spavor on charges of espionage.[66] This was widely seen as a retaliatory move, and other subsequent arrests were also questioned.[67] These arrests have been viewed as hostage diplomacy,[68] as has the subsequent arrest of Australian Yang Hengjun.[69][70][71]
"Canada is not the only one grappling with the Gordian knot of national security, global alliance and competitive market issues that Huawei represents," wrote the Financial post, noting that Australia and New Zealand have banned Huawei equipment, Britain is weighing its options, and the situation in the United States is "complicated".[15]
In September 2019, Microsoft's top lawyer and president Brad Smith expressed concern about the continued US ban of Huawei products and services. In an interview with Bloomberg Businessweek, he remarked that the ban shouldn't be imposed without a "sound basis in fact, logic, and the rule of law". Microsoft Corporation, which supplies Windows 10 for Huawei PCs, says the allegations by the Trump administration that Huawei is a genuine national security threat to the US are not supported by any evidence.[72]
U.S. business restrictions
In August 2018, the National Defense Authorization Act for Fiscal Year 2019 (NDAA 2019) was signed into law, containing a provision that banned Huawei and ZTE equipment from being used by the U.S. federal government, citing security concerns.[73] Huawei filed a lawsuit over the act in March 2019,[74] alleging it to be unconstitutional because it specifically targeted Huawei without granting it a chance to provide a rebuttal or due process.[75]
On 15 May 2019, the Department of Commerce added Huawei and 70 foreign subsidiaries and "affiliates" to its entity list under the Export Administration Regulations, citing the company having been indicted for "knowingly and willfully causing the export, re-export, sale and supply, directly and indirectly, of goods, technology and services (banking and other financial services) from the United States to Iran and the government of Iran without obtaining a license from the Department of Treasury's Office of Foreign Assets Control (OFAC)".[76] This restricts U.S. companies from doing business with Huawei without a government license.[77][78][79][80]
Various U.S.-based companies immediately froze their business with Huawei to comply with the regulation,[81] including Google—which removes its ability to certify future devices and updates for the Android operating system with licensed Google Mobile Services (GMS) such as Google Play Store,[82][83] as well as Broadcom, Intel, Qualcomm, Microsoft, Xilinx[84] and Western Digital. The German chipmaker Infineon Technologies also voluntarily suspended its business with Huawei, pending "assessments".[83][85][86] It was reported that Huawei did have a limited "stockpile" of U.S.-sourced parts, obtained prior to the sanctions.[87]
On 17 May 2019, Huawei voluntarily suspended its membership to JEDEC, as a temporary measure, "until the restrictions imposed by the U.S. government are removed".[88] Speaking to Chinese media, Huawei founder Ren Zhengfei accused U.S. politicians of underestimating the company's strength, and explained that "in terms of 5G technologies, others won't be able to catch up with Huawei in two or three years. We have sacrificed ourselves and our families for our ideal, to stand on top of the world. To reach this ideal, sooner or later there will be conflict with the US."[89][90][91]
Kevin Wolf, an international trade lawyer and former assistant secretary of commerce for export administration during the Obama administration, argued that Huawei could not even use the open source Android Open Source Project (AOSP) code, as it could fall under U.S. trade regulations as technology of U.S. origin because Google is the majority developer.[92] In China, it is normal for Android phones (including those of Huawei) to not include Google Play Store or GMS, as Google does not do business in the region. Phones are typically bundled with an AOSP-based distribution built around an OEM's own software suite, including either a first-party app store run by the OEM (such as Huawei's own AppGallery) or a third-party service.[93][94][95]
Google issued a statement assuring that user access to Google Play on existing Huawei devices would not be disrupted. Huawei made a similar pledge of continued support for existing devices, including security patches, but did not make any statements regarding the availability of future Android versions (such as the upcoming Android 10, previously called Android Q).[96][97] On 19 May 2019, the Department of Commerce granted Huawei a temporary, three-month license to continue doing business with U.S. companies for the purposes of maintaining its existing smartphone and telecom products without interruption, whilst long-term solutions are determined.[98][99][100][101]
On 22 May 2019, Arm Holdings also suspended its business with Huawei, including all "active contracts, support entitlements, and any pending engagements". Although it is a Japanese-owned company based in the UK, Arm cited that its intellectual property contained technologies of U.S. origin that it believed were covered under the Department of Commerce order. This prevents Huawei from manufacturing chips that use the ARM architecture.[102] It was also reported that several Asian wireless carriers, including Japan's SoftBank and KDDI, and Taiwan's Chunghwa Telecom and Taiwan Mobile, had suspended the sale of upcoming Huawei devices such as the P30 Lite, citing uncertainties over the effects of the U.S. sanctions on the availability of the Android platform. NTT docomo similarly suspended pre-orders of new Huawei phones, without citing any reasoning.[103]
On 23 May 2019, it was reported that the SD Association had removed Huawei from its list of members—implicating a revocation of its membership to the association.[104] The same day, Toshiba briefly suspended all shipments to Huawei, as a temporary measure while determining whether or not they were selling U.S. made components or technologies to Huawei.[105] Panasonic also stated that it had determined its business relationship to be in compliance with U.S. law, and would not suspend it.[106] The next day, the Wi-Fi Alliance also "temporarily restricted" Huawei's membership.[88][107]
On 24 May 2019, Huawei told Reuters that FedEx attempted to divert two packages sent from Japan and addressed to Huawei in China to the United States, and tried to divert two more packages sent from Vietnam to Huawei offices elsewhere in Asia, all without their authorization. At first, FedEx China claimed that "media reports are not true". On May 28, however, they apologized on their Chinese social media account for the fact that "a small number of Huawei shipments were misrouted", and claimed that "there are no external parties that require FedEx to ship these shipments" .[108][109][110]
On 29 May 2019, it was reported that Huawei was once again listed as member of JEDEC, the SD Association, and Wi-Fi Alliance.[111] In addition, while the science organization IEEE had initially banned Huawei employees from peer-reviewing papers or handling papers as editors on May 30, 2019, citing legal concerns, that ban was also revoked on June 3, 2019.[112]
On 31 May 2019, it was reported that Huawei had temporarily stopped its smartphone production lines. [113]
On 17 June 2019, it was reported that Huawei was preparing for a sales drop of US$30 Billion, selling 40 million to 60 million smartphones less than last year in overseas markets. [114][115]
On 29 June 2019 at the G20 summit, Trump and Chinese president and general secretary Xi Jinping agreed to resume trade negotiations. Trump made statements implicating plans to ease the restrictions on U.S. companies doing business with Huawei, explaining that they had sold a "tremendous amount of products" to the company, that they "were not exactly happy that they couldn't sell", and that he was referring to "equipment where there's no great national security problem with it." BBC News considered this move to be a "significant concession".[116][117][118]
On October 25, 2019, ARM announced that it has decided to keep supplying Huawei with its chip designs after its legal team concluded that its v8 and v9 architectures are of non-U.S. origin. That means supplying these technologies to the Chinese firm will not violate existing U.S. restrictions, ARM says.[119]
On November 5, 2019, US Commerce Secretary Wilbur Ross confirmed in an interview with Bloomberg that they are on phase one of a trade deal between the US and China. After this, US companies will be allowed to work with Huawei.[120]
Replacement operating systems
During the sanctions, it was noted that Huawei had been working on its own in-house operating system codenamed "HongMeng OS": in an interview with Die Welt, executive Richard Yu stated that an in-house OS could be used as a "plan B" if it were prevented from using Android or Windows as the result of U.S. action, but that he would "prefer to work with the ecosystems of Google and Microsoft". Efforts to develop an in-house OS at Huawei date back as far as 2012.[121][122][123] Huawei filed trademarks for the names "Ark", "Ark OS", and "Harmony" in Europe, which were speculated to be connected to this OS.[124][125]
In June 2019, Huawei communications VP Andrew Williamson told Reuters that the company was testing HongMeng in China, and that it could be ready "in months". However, in July 2019, chairman Liang Hua and senior vice president Catherine Chen stated that Hongmeng OS was not actually intended as a mobile operating system for smartphones, and was actually an embedded operating system designed for Internet of things (IoT) hardware.[126][127][128]
In September 2019, Huawei began offering the Chinese Linux distribution Deepin as an optional pre-loaded operating system on selected Matebook models in China, as an alternative to Windows.[129]
Corporate affairs
Huawei classifies itself as a "collective" entity and prior to 2019 did not refer to itself as a private company. Richard McGregor, author of The Party: The Secret World of China's Communist Rulers, said that this is "a definitional distinction that has been essential to the company's receipt of state support at crucial points in its development".[130] McGregor argued that "Huawei's status as a genuine collective is doubtful."[130] Huawei's position has shifted in 2019 when, Dr. Song Liuping, Huawei's chief legal officer, commented on the US government ban, said: "Politicians in the US are using the strength of an entire nation to come after a private company." (emphasis added).[131]
Leadership
Ren Zhengfei is the founder and CEO of Huawei and has the power to veto any decisions made by the board of directors.[132][133]
Board of Directors
Huawei disclosed its list of board of directors for the first time in 2010.[134] Liang Hua is the current chair of the board. As of 2019, the members of the board are Liang Hua, Guo Ping, Xu Zhijun, Hu Houkun, Meng Wanzhou (CFO and deputy chairwoman, currently out on bail in Vancouver,[135] after being arrested there on December 1, 2018, after an extradition request of US authorities on suspicion of Iran sanctions evasion[136]), Ding Yun, Yu Chengdong, Wang Tao, Xu Wenwei, Chen Lifang, Peng Zhongyang, He Tingbo, Li Yingtao, Ren Zhengfei, Yao Fuhai, Tao Jingwen, and Yan Lida.[137]
Executives
Guo Ping is the Chairman of Huawei Device, Huawei's mobile phone division.[138] Huawei's Chief Ethics & Compliance Officer is Zhou Daiqi[139] who is also Huawei's communist party committee secretary.[140] Their Chief legal officer is Song Liuping.[131]
Ownership
Huawei claims it is an employee-owned company, but it remains a point of dispute.[132] Ren Zhengfei retains approximately 1 percent of the shares of Huawei's holding company, Huawei Investment & Holding,[141] with the remainder of the shares held by a trade union committee (not a trade union per se, and the internal governance procedures of this committee, its members, its leaders or how they are selected all remain undisclosed to the public)[132] that is claimed to be representative of Huawei's employee shareholders.[142] The company's trade union committee is registered with and pay dues to the Shenzhen federation of the All-China Federation of Trade Unions, which is effectively controlled by the Chinese Communist Party.[143] This is also due to a limitation in Chinese law preventing limited liability companies from having more than 50 shareholders.[144] About half of Huawei staff participate in this scheme (foreign employees are not eligible), and hold what the company calls "virtual restricted shares". These shares are non-tradable and are allocated to reward performance.[145] When employees leave Huawei, their shares revert to the company, which compensates them for their holding.[146] Although employee shareholders receive dividends,[142] their shares do not entitle them to any direct influence in management decisions, but enables them to vote for members of the 115-person Representatives’ Commission from a pre-selected list of candidates.[142] The Representatives’ Commission selects Huawei Holding's Board of Directors and Board of Supervisors.[147] Scholars have found that, after a few stages of historical morphing, employees do not own a part of Huawei through their “shares”. Instead, the “virtual stock is a contract right, not a property right; it gives the holder no voting power in either Huawei Tech or Huawei Holding, cannot be transferred, and is cancelled when the employee leaves the firm, subject to a redemption payment from Huawei Holding TUC at a low fixed price”.[148]
Partners
As of the beginning of 2010, approximately 80% of the world's top 50 telecoms companies had worked with Huawei.[149]
Prominent partners include:
Bell Canada[150]
BT[151]
Clearwire[149]
Cox Communications
Globe Telecom[152]
Motorola[153][154]
Orange[155]
PLDT[156]
Portugal Telecom
PTCL
T-Mobile
TalkTalk
Vodafone[157][158]
Since 2016, German camera company Leica has established a partnership with Huawei, and Leica cameras will be co-engineered into Huawei smartphones, including the P and Mate Series. The first smartphone to be co-engineered with a Leica camera was the Huawei P9.[159]
In 2020, Huawei partners with Dutch navigation device company TomTom for Google map alternative. [160]
Products and services
Huawei is organized around three core business segments:
Telecom Carrier Networks, building telecommunications networks and services
Enterprise Business, providing equipment, software and services to enterprise customers, e.g. Government Solutions - see Huawei 4G eLTE[161]
Devices, manufacturing electronic communications devices[6]
Huawei announced its Enterprise business in January 2011 to provide network infrastructure, fixed and wireless communication, data center, and cloud computing solutions[buzzword] for global telecommunications customers.[162]
Telecom networks
Huawei's core network solutions[buzzword] offer mobile and fixed softswitches, plus next-generation home location register and Internet Protocol Multimedia Subsystems (IMS). Huawei sells xDSL, passive optical network (PON) and next-generation PON (NG PON) on a single platform. The company also offers mobile infrastructure, broadband access and service provider routers and switches (SPRS). Huawei's software products include service delivery platforms (SDPs), BSSs, Rich Communication Suite and digital home and mobile office solutions[buzzword].[163]
Global services
Huawei Global Services provides telecommunications operators with equipment to build and operate networks as well as consulting and engineering services to improve operational efficiencies.[164] These include network integration services such as those for mobile and fixed networks; assurance services such as network safety; and learning services, such as competency consulting.
The company was founded in 1987 by Ren Zhengfei. Initially focused on manufacturing phone switches, Huawei has expanded its business to include building telecommunications networks, providing operational and consulting services and equipment to enterprises inside and outside of China, and manufacturing communications devices for the consumer market.[5][6] Huawei has over 194,000 employees as of December 2019.[7]
Huawei has deployed its products and services in more than 170 countries.[8] Huawei overtook Ericsson in 2012 as the largest telecommunications-equipment manufacturer in the world,[9] and overtook Apple in 2018 as the second-largest manufacturer of smartphones in the world, behind Samsung Electronics.[10] In December 2019, Huawei reported that its annual revenue had risen to US$121.72 billion in 2019.[11]
Although successful internationally, Huawei has faced difficulties in some markets, due to claims of undue state support and cybersecurity concerns—primarily from the United States government—that Huawei's infrastructure equipment may enable surveillance by the Chinese government.[12] With the development of 5G wireless networks, there have been calls from the U.S. to prevent the use of products by Huawei or fellow Chinese telecom ZTE by the U.S. or its allies. Huawei has argued that its products posed "no greater cybersecurity risk" than those of any other vendor and that there is no evidence of the U.S. espionage claims.[13] Nonetheless, Huawei pulled out of the U.S. consumer market in 2018, after these concerns affected the ability to market their consumer products there. Questions regarding Huawei's ownership and control as well as concerns regarding the extent of state support also remain.[12]
In the midst of an ongoing trade war between China and the United States, Huawei was restricted from doing commerce with U.S. companies due to alleged previous willful violations of U.S. sanctions against Iran. On 29 June 2019, U.S. President Donald Trump reached an agreement to resume trade talks with China and announced that he would ease the aforementioned sanctions on Huawei. Huawei cut 600 jobs at its Santa Clara research center in June, and in December 2019 founder Ren Zhengfei said it was moving the center to Canada because the restrictions would block them from interacting with US employees.
According to the company founder Ren Zhengfei, the name Huawei comes from a slogan he saw on a wall, Zhonghua youwei meaning "China has promise" (中华有为, Zhōnghuá yǒuwéi), when he was starting the company and needed a name.[16] Zhonghua or Hua means China,[17] while youwei means "promising/to show promise".[18][19] Huawei has also been translated as "splendid achievement" or "China is able" which are possible readings to the name.[20] In Chinese pinyin, the name is Huáwéi,[21] and pronounced [xwǎwéi] in Mandarin Chinese; in Cantonese, the name is transliterated with Jyutping as Waa4-wai4 and pronounced [wȁːwɐ̏i]. However, pronunciation of Huawei by non-Chinese varies in other countries, for example "Hoe-ah-wei" in the Netherlands.[22] The company had considered changing the name in English as it was concerned that non-Chinese may find the name hard to pronounce,[23] but decided to keep the name, and launched a name recognition campaign instead to encourage a pronunciation closer to "Wah-Way" using the words "Wow Way".[24][25]
History
Early years
During the 1980s, the Chinese government tried to modernize the country's underdeveloped telecommunications infrastructure. A core component of the telecommunications network was telephone exchange switches, and in the late 1980s, several Chinese research groups endeavored to acquire and develop the technology, usually through joint ventures with foreign companies.
Ren Zhengfei, a former deputy director of the People's Liberation Army engineering corps, founded Huawei in 1987 in Shenzhen. The company reports that it had RMB 21,000 in registered capital at the time of its founding.
Ren sought to reverse engineer foreign technologies with local researchers. At a time when all of China's telecommunications technology was imported from abroad, Ren hoped to build a domestic Chinese telecommunication company that could compete with, and ultimately replace, foreign competitors.[26]
During its first several years the company's business model consisted mainly of reselling private branch exchange (PBX) switches imported from Hong Kong.[5][27] Meanwhile, it was reverse-engineering imported switches and investing heavily in research and development to manufacture its own technologies.[5] By 1990 the company had approximately 600 R&D staff and began its own independent commercialization of PBX switches targeting hotels and small enterprises.[28]
The company's first major breakthrough came in 1993 when it launched its C&C08 program controlled telephone switch. It was by far the most powerful switch available in China at the time. By initially deploying in small cities and rural areas and placing emphasis on service and customizability, the company gained market share and made its way into the mainstream market.[29]
Huawei also won a key contract to build the first national telecommunications network for the People's Liberation Army, a deal one employee described as "small in terms of our overall business, but large in terms of our relationships".[30] In 1994, founder Ren Zhengfei had a meeting with Party general secretary Jiang Zemin, telling him that "switching equipment technology was related to national security, and that a nation that did not have its own switching equipment was like one that lacked its own military." Jiang reportedly agreed with this assessment.[5]
In the 1990s Canadian telecom giant Nortel outsourced production of their entire product line to Huawei.[31] They subsequently outsourced much of their product engineering to Huawei as well.[32]
Another major turning point for the company came in 1996 when the government in Beijing adopted an explicit policy of supporting domestic telecommunications manufacturers and restricting access to foreign competitors. Huawei was promoted by both the government and the military as a national champion, and established new research and development offices.[5]
Foreign expansion
In 1997, Huawei won a contract to provide fixed-line network products to Hong Kong company Hutchison Whampoa.[29] Later that year, Huawei launched its wireless GSM-based products and eventually expanded to offer CDMA and UMTS. In 1999, the company opened a research and development (R&D) center in Bangalore, India to develop a wide range of telecom software.[28]
In May 2003, Huawei partnered with 3Com on a joint venture known as H3C, which was focused on enterprise networking equipment. It marked 3Com's re-entrance into the high-end core routers and switch market, after having abandoned it in 2000 to focus on other businesses. 3Com bought out Huawei's share of the venture in 2006 for US$882 million.[33][34]
In 2005, Huawei's foreign contract orders exceeded its domestic sales for the first time. Huawei signed a Global Framework Agreement with Vodafone. This agreement marked the first time a telecommunications equipment supplier from China had received Approved Supplier status from Vodafone Global Supply Chain.[35][non-primary source needed] Huawei also signed a contract with British Telecom (BT) for the deployment of its multi-service access network (MSAN) and Transmission equipment for BT's 21st Century Network (21CN).[citation needed]
In 2007, Huawei began a joint venture with U.S. security software vendor Symantec Corporation, known as Huawei Symantec, which aimed to provide end-to-end solutions for network data storage and security. Huawei bought out Symantec's share in the venture in 2012, with The New York Times noting that Symantec had fears that the partnership "would prevent it from obtaining United States government classified information about cyberthreats".[36]
In May 2008, Australian carrier Optus announced that it would establish a technology research facility with Huawei in Sydney.[37] In October 2008, Huawei reached an agreement to contribute to a new GSM-based HSPA+ network being deployed jointly by Canadian carriers Bell Mobility and Telus Mobility, joined by Nokia Siemens Networks.[38] Huawei delivered one of the world's first LTE/EPC commercial networks for TeliaSonera in Oslo, Norway in 2009.[28]
In July 2010, Huawei was included in the Global Fortune 500 2010 list published by the U.S. magazine Fortune for the first time, on the strength of annual sales of US$21.8 billion and net profit of US$2.67 billion.[39][40]
In October 2012, it was announced that Huawei would move its UK headquarters to Green Park, Reading, Berkshire.[41]
In September 2017, Huawei created a NarrowBand IOT city-aware network using a "one network, one platform, N applications" construction model utilising IoT, cloud computing, big data, and other next-generation information and communications technology, it also aims to be one of the world's five largest cloud players in the near future.[42][43]
In April 2019, Huawei established Huawei Malaysia Global Training Centre (MGTC) at Cyberjaya, Malaysia,[44] which is Huawei's first training centre outside of China.
In September 2019 Huawei filed a defamation lawsuit against a French researcher and a television show which had hosted her.[45] The researcher, with the Foundation for Strategic Research, had noted that Ren Zhengfei was a former PLA member and that Huawei functions as an arm of the Chinese government.[46] This was the first time Huawei had sued a researcher for defamation for stating common opinions and recognized facts.[47]
Recent performance
As of the end of 2018, Huawei sold 200 million smartphones.[48] They reported that strong consumer demand for premium range smart phones helped the company reach consumer sales in excess of $52 billion in 2018.[49]
Huawei announced worldwide revenues of $105.1 billion for 2018, with a net profit of $8.7 billion.[50] Huawei's Q1 2019 revenues were up 39% year-over-year, at US$26.76 billion.[51]
In 2019, Huawei reported revenue of US$122 billion.[52]
Political controversies
Huawei has been at the center of espionage allegations over Chinese 5G network equipment. In 2018, the United States passed a defense funding bill that contained a passage barring the federal government from doing business with Huawei, ZTE, and several Chinese vendors of surveillance products, due to security concerns.[53][54][55]
On 1 December 2018, Huawei vice-chairwoman and CFO Meng Wanzhou,[56] daughter of company founder Ren Zhengfei, was arrested in Canada at the request of U.S. authorities. She faced extradition to the United States on charges of violating sanctions against Iran.[57] On 22 August 2018 an arrest warrant was issued by the U.S. District Court for the Eastern District of New York.[58] Meng was charged with "conspiracy to defraud multiple international institutions", according to the prosecutor.[59] The warrant was based on allegations of a conspiracy to defraud banks which were clearing money that was claimed to be for Huawei, but was actually for Skycom, an entity claimed to be entirely controlled by Huawei, which was said to be dealing in Iran, contrary to sanctions. None of the allegations have been proven in court.[60] On 11 December 2018, Meng was released on bail.[61]
On 28 January 2019, U.S. federal prosecutors formally indicted Meng and Huawei with 13 counts of bank and wire fraud (in order to mask sale of U.S. technology in Iran that is illegal under sanctions), obstruction of justice, and misappropriating trade secrets.[62][63] The Department also filed a formal extradition request for Meng with Canadian authorities that same day. Huawei responded to the charges and said that it "denies that it or its subsidiary or affiliate have committed any of the asserted violations", as well as asserted Meng was similarly innocent. The China Ministry of Industry and Information Technology believed the charges brought on by the United States were "unfair".[64] In November 2019, Huawei announced that it will pay RMB2 billion (US$286 million) in bonuses to its staff, and double their October salaries, as a reward for their efforts to counter the effect of recent U.S. trade sanctions on their supply chain.[65]
Shortly after Meng's detention, Chinese authorities arrested Canadian former diplomat Michael Kovrig and consultant Michael Spavor on charges of espionage.[66] This was widely seen as a retaliatory move, and other subsequent arrests were also questioned.[67] These arrests have been viewed as hostage diplomacy,[68] as has the subsequent arrest of Australian Yang Hengjun.[69][70][71]
"Canada is not the only one grappling with the Gordian knot of national security, global alliance and competitive market issues that Huawei represents," wrote the Financial post, noting that Australia and New Zealand have banned Huawei equipment, Britain is weighing its options, and the situation in the United States is "complicated".[15]
In September 2019, Microsoft's top lawyer and president Brad Smith expressed concern about the continued US ban of Huawei products and services. In an interview with Bloomberg Businessweek, he remarked that the ban shouldn't be imposed without a "sound basis in fact, logic, and the rule of law". Microsoft Corporation, which supplies Windows 10 for Huawei PCs, says the allegations by the Trump administration that Huawei is a genuine national security threat to the US are not supported by any evidence.[72]
U.S. business restrictions
In August 2018, the National Defense Authorization Act for Fiscal Year 2019 (NDAA 2019) was signed into law, containing a provision that banned Huawei and ZTE equipment from being used by the U.S. federal government, citing security concerns.[73] Huawei filed a lawsuit over the act in March 2019,[74] alleging it to be unconstitutional because it specifically targeted Huawei without granting it a chance to provide a rebuttal or due process.[75]
On 15 May 2019, the Department of Commerce added Huawei and 70 foreign subsidiaries and "affiliates" to its entity list under the Export Administration Regulations, citing the company having been indicted for "knowingly and willfully causing the export, re-export, sale and supply, directly and indirectly, of goods, technology and services (banking and other financial services) from the United States to Iran and the government of Iran without obtaining a license from the Department of Treasury's Office of Foreign Assets Control (OFAC)".[76] This restricts U.S. companies from doing business with Huawei without a government license.[77][78][79][80]
Various U.S.-based companies immediately froze their business with Huawei to comply with the regulation,[81] including Google—which removes its ability to certify future devices and updates for the Android operating system with licensed Google Mobile Services (GMS) such as Google Play Store,[82][83] as well as Broadcom, Intel, Qualcomm, Microsoft, Xilinx[84] and Western Digital. The German chipmaker Infineon Technologies also voluntarily suspended its business with Huawei, pending "assessments".[83][85][86] It was reported that Huawei did have a limited "stockpile" of U.S.-sourced parts, obtained prior to the sanctions.[87]
On 17 May 2019, Huawei voluntarily suspended its membership to JEDEC, as a temporary measure, "until the restrictions imposed by the U.S. government are removed".[88] Speaking to Chinese media, Huawei founder Ren Zhengfei accused U.S. politicians of underestimating the company's strength, and explained that "in terms of 5G technologies, others won't be able to catch up with Huawei in two or three years. We have sacrificed ourselves and our families for our ideal, to stand on top of the world. To reach this ideal, sooner or later there will be conflict with the US."[89][90][91]
Kevin Wolf, an international trade lawyer and former assistant secretary of commerce for export administration during the Obama administration, argued that Huawei could not even use the open source Android Open Source Project (AOSP) code, as it could fall under U.S. trade regulations as technology of U.S. origin because Google is the majority developer.[92] In China, it is normal for Android phones (including those of Huawei) to not include Google Play Store or GMS, as Google does not do business in the region. Phones are typically bundled with an AOSP-based distribution built around an OEM's own software suite, including either a first-party app store run by the OEM (such as Huawei's own AppGallery) or a third-party service.[93][94][95]
Google issued a statement assuring that user access to Google Play on existing Huawei devices would not be disrupted. Huawei made a similar pledge of continued support for existing devices, including security patches, but did not make any statements regarding the availability of future Android versions (such as the upcoming Android 10, previously called Android Q).[96][97] On 19 May 2019, the Department of Commerce granted Huawei a temporary, three-month license to continue doing business with U.S. companies for the purposes of maintaining its existing smartphone and telecom products without interruption, whilst long-term solutions are determined.[98][99][100][101]
On 22 May 2019, Arm Holdings also suspended its business with Huawei, including all "active contracts, support entitlements, and any pending engagements". Although it is a Japanese-owned company based in the UK, Arm cited that its intellectual property contained technologies of U.S. origin that it believed were covered under the Department of Commerce order. This prevents Huawei from manufacturing chips that use the ARM architecture.[102] It was also reported that several Asian wireless carriers, including Japan's SoftBank and KDDI, and Taiwan's Chunghwa Telecom and Taiwan Mobile, had suspended the sale of upcoming Huawei devices such as the P30 Lite, citing uncertainties over the effects of the U.S. sanctions on the availability of the Android platform. NTT docomo similarly suspended pre-orders of new Huawei phones, without citing any reasoning.[103]
On 23 May 2019, it was reported that the SD Association had removed Huawei from its list of members—implicating a revocation of its membership to the association.[104] The same day, Toshiba briefly suspended all shipments to Huawei, as a temporary measure while determining whether or not they were selling U.S. made components or technologies to Huawei.[105] Panasonic also stated that it had determined its business relationship to be in compliance with U.S. law, and would not suspend it.[106] The next day, the Wi-Fi Alliance also "temporarily restricted" Huawei's membership.[88][107]
On 24 May 2019, Huawei told Reuters that FedEx attempted to divert two packages sent from Japan and addressed to Huawei in China to the United States, and tried to divert two more packages sent from Vietnam to Huawei offices elsewhere in Asia, all without their authorization. At first, FedEx China claimed that "media reports are not true". On May 28, however, they apologized on their Chinese social media account for the fact that "a small number of Huawei shipments were misrouted", and claimed that "there are no external parties that require FedEx to ship these shipments" .[108][109][110]
On 29 May 2019, it was reported that Huawei was once again listed as member of JEDEC, the SD Association, and Wi-Fi Alliance.[111] In addition, while the science organization IEEE had initially banned Huawei employees from peer-reviewing papers or handling papers as editors on May 30, 2019, citing legal concerns, that ban was also revoked on June 3, 2019.[112]
On 31 May 2019, it was reported that Huawei had temporarily stopped its smartphone production lines. [113]
On 17 June 2019, it was reported that Huawei was preparing for a sales drop of US$30 Billion, selling 40 million to 60 million smartphones less than last year in overseas markets. [114][115]
On 29 June 2019 at the G20 summit, Trump and Chinese president and general secretary Xi Jinping agreed to resume trade negotiations. Trump made statements implicating plans to ease the restrictions on U.S. companies doing business with Huawei, explaining that they had sold a "tremendous amount of products" to the company, that they "were not exactly happy that they couldn't sell", and that he was referring to "equipment where there's no great national security problem with it." BBC News considered this move to be a "significant concession".[116][117][118]
On October 25, 2019, ARM announced that it has decided to keep supplying Huawei with its chip designs after its legal team concluded that its v8 and v9 architectures are of non-U.S. origin. That means supplying these technologies to the Chinese firm will not violate existing U.S. restrictions, ARM says.[119]
On November 5, 2019, US Commerce Secretary Wilbur Ross confirmed in an interview with Bloomberg that they are on phase one of a trade deal between the US and China. After this, US companies will be allowed to work with Huawei.[120]
Replacement operating systems
During the sanctions, it was noted that Huawei had been working on its own in-house operating system codenamed "HongMeng OS": in an interview with Die Welt, executive Richard Yu stated that an in-house OS could be used as a "plan B" if it were prevented from using Android or Windows as the result of U.S. action, but that he would "prefer to work with the ecosystems of Google and Microsoft". Efforts to develop an in-house OS at Huawei date back as far as 2012.[121][122][123] Huawei filed trademarks for the names "Ark", "Ark OS", and "Harmony" in Europe, which were speculated to be connected to this OS.[124][125]
In June 2019, Huawei communications VP Andrew Williamson told Reuters that the company was testing HongMeng in China, and that it could be ready "in months". However, in July 2019, chairman Liang Hua and senior vice president Catherine Chen stated that Hongmeng OS was not actually intended as a mobile operating system for smartphones, and was actually an embedded operating system designed for Internet of things (IoT) hardware.[126][127][128]
In September 2019, Huawei began offering the Chinese Linux distribution Deepin as an optional pre-loaded operating system on selected Matebook models in China, as an alternative to Windows.[129]
Corporate affairs
Huawei classifies itself as a "collective" entity and prior to 2019 did not refer to itself as a private company. Richard McGregor, author of The Party: The Secret World of China's Communist Rulers, said that this is "a definitional distinction that has been essential to the company's receipt of state support at crucial points in its development".[130] McGregor argued that "Huawei's status as a genuine collective is doubtful."[130] Huawei's position has shifted in 2019 when, Dr. Song Liuping, Huawei's chief legal officer, commented on the US government ban, said: "Politicians in the US are using the strength of an entire nation to come after a private company." (emphasis added).[131]
Leadership
Ren Zhengfei is the founder and CEO of Huawei and has the power to veto any decisions made by the board of directors.[132][133]
Board of Directors
Huawei disclosed its list of board of directors for the first time in 2010.[134] Liang Hua is the current chair of the board. As of 2019, the members of the board are Liang Hua, Guo Ping, Xu Zhijun, Hu Houkun, Meng Wanzhou (CFO and deputy chairwoman, currently out on bail in Vancouver,[135] after being arrested there on December 1, 2018, after an extradition request of US authorities on suspicion of Iran sanctions evasion[136]), Ding Yun, Yu Chengdong, Wang Tao, Xu Wenwei, Chen Lifang, Peng Zhongyang, He Tingbo, Li Yingtao, Ren Zhengfei, Yao Fuhai, Tao Jingwen, and Yan Lida.[137]
Executives
Guo Ping is the Chairman of Huawei Device, Huawei's mobile phone division.[138] Huawei's Chief Ethics & Compliance Officer is Zhou Daiqi[139] who is also Huawei's communist party committee secretary.[140] Their Chief legal officer is Song Liuping.[131]
Ownership
Huawei claims it is an employee-owned company, but it remains a point of dispute.[132] Ren Zhengfei retains approximately 1 percent of the shares of Huawei's holding company, Huawei Investment & Holding,[141] with the remainder of the shares held by a trade union committee (not a trade union per se, and the internal governance procedures of this committee, its members, its leaders or how they are selected all remain undisclosed to the public)[132] that is claimed to be representative of Huawei's employee shareholders.[142] The company's trade union committee is registered with and pay dues to the Shenzhen federation of the All-China Federation of Trade Unions, which is effectively controlled by the Chinese Communist Party.[143] This is also due to a limitation in Chinese law preventing limited liability companies from having more than 50 shareholders.[144] About half of Huawei staff participate in this scheme (foreign employees are not eligible), and hold what the company calls "virtual restricted shares". These shares are non-tradable and are allocated to reward performance.[145] When employees leave Huawei, their shares revert to the company, which compensates them for their holding.[146] Although employee shareholders receive dividends,[142] their shares do not entitle them to any direct influence in management decisions, but enables them to vote for members of the 115-person Representatives’ Commission from a pre-selected list of candidates.[142] The Representatives’ Commission selects Huawei Holding's Board of Directors and Board of Supervisors.[147] Scholars have found that, after a few stages of historical morphing, employees do not own a part of Huawei through their “shares”. Instead, the “virtual stock is a contract right, not a property right; it gives the holder no voting power in either Huawei Tech or Huawei Holding, cannot be transferred, and is cancelled when the employee leaves the firm, subject to a redemption payment from Huawei Holding TUC at a low fixed price”.[148]
Partners
As of the beginning of 2010, approximately 80% of the world's top 50 telecoms companies had worked with Huawei.[149]
Prominent partners include:
Bell Canada[150]
BT[151]
Clearwire[149]
Cox Communications
Globe Telecom[152]
Motorola[153][154]
Orange[155]
PLDT[156]
Portugal Telecom
PTCL
T-Mobile
TalkTalk
Vodafone[157][158]
Since 2016, German camera company Leica has established a partnership with Huawei, and Leica cameras will be co-engineered into Huawei smartphones, including the P and Mate Series. The first smartphone to be co-engineered with a Leica camera was the Huawei P9.[159]
In 2020, Huawei partners with Dutch navigation device company TomTom for Google map alternative. [160]
Products and services
Huawei is organized around three core business segments:
Telecom Carrier Networks, building telecommunications networks and services
Enterprise Business, providing equipment, software and services to enterprise customers, e.g. Government Solutions - see Huawei 4G eLTE[161]
Devices, manufacturing electronic communications devices[6]
Huawei announced its Enterprise business in January 2011 to provide network infrastructure, fixed and wireless communication, data center, and cloud computing solutions[buzzword] for global telecommunications customers.[162]
Telecom networks
Huawei's core network solutions[buzzword] offer mobile and fixed softswitches, plus next-generation home location register and Internet Protocol Multimedia Subsystems (IMS). Huawei sells xDSL, passive optical network (PON) and next-generation PON (NG PON) on a single platform. The company also offers mobile infrastructure, broadband access and service provider routers and switches (SPRS). Huawei's software products include service delivery platforms (SDPs), BSSs, Rich Communication Suite and digital home and mobile office solutions[buzzword].[163]
Global services
Huawei Global Services provides telecommunications operators with equipment to build and operate networks as well as consulting and engineering services to improve operational efficiencies.[164] These include network integration services such as those for mobile and fixed networks; assurance services such as network safety; and learning services, such as competency consulting.
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