Huawei doubles down on 5G ahead of Mobile World Congress
One of the perks of being an industry analyst covering the tech and telecommunications industries is that we get to visit multiple countries around the world and get exposed to cutting edge technologies and innovations. Recently, I found myself in Beijing to attend a “pre-MWC (Mobile World Congress) briefing” session organized by Huawei Technologies. The venue for the Huawei briefing was a palatial Executive Briefing Center in the Research Institute campus in Zhongguancun, replete with an upper floor that looked like a hotel lobby and restrooms with what looked like gold-plated handles at the wash basins. But we digress…
There were three speakers and the entire briefing lasted a little over an hour.
Ryan Ding, Executive Director of the Board and President of the Carrier Business Group, kicked off the proceedings.
Mr. Ding spoke emphatically about Huawei’s leadership and pace setting for the 5G era, with an emphasis on Huawei’s end to end story spanning everything from the device to the radio and core networks to the datacentre.
Huawei had already announced the Kunpeng 920 (CPU) chip as well as the Ascend 910 (AI) chipsets targeting the enterprise datacentre market. Adding to this, the first Huawei announcements was the launch of TIANGANG, a new 5G chipset designed for the base station. With support for 64T64R antenna arrays, Huawei claimed that this chipset design would help reduce power consumption for the BTS by 90%. Moreover, with support for all radio frequencies and technologies, the TIANGANG would slot into a modular antenna array unit (AAU) along with the baseband (BBU) and remote radio unit (RRU) that would make a base station with a dramatically reduced footprint.
Indeed, Mr. Ding showed demos of a complete base station unit that was remarkably compact and easy to physically install. Lastly, Huawei claimed that due to their breakthrough innovations in reducing heat dissipation, the new BTS design did not need custom racks or air conditioning to protect the equipment. This last point is important, as the potential energy savings along with the ease of installation would have a tremendously beneficial impact on operator opex.
Wang Yaoching, President of the 5G Product Line, was the next speaker.
Mr. Wang underlined Huawei’s leadership credentials for 5G, citing the 30 commercial contracts that were already signed with more than 25,000 base stations already shipped. Of course, the fact that there were no operator logos shown would lead one to infer that most of these customer deployments were in China.
However, Mr. Wang confirmed that 18 of the 30 contracts were in Europe and that the Huawei 5G solutions were already fully certified in Europe. Huawei is also involved with 30+ pre-commercial field trials across 17 provinces in China, underlining the country’s propensity for truly massive scale field trials of new technologies in some of the most trying conditions possible.
In some of these tests, Huawei shared data published by the Chinese Government that showed they had achieved a throughput rate of 14.58 Gbps in a 100 MHz channel in a C-band frequency. According to Mr. Wang, the ability to deploy 64T64R would improve coverage by 80%, thereby driving huge savings in network deployment and equipment costs.
Wang also spoke at some length about Huawei’s innovations in energy savings per bit, claiming that the 5G solution clocked in at a mere 0.13 watts per Mbps, a 25x improvement over 4G. With Huawei’s artificial intelligence (AI) software also deployed, Wang claimed that the Huawei 5G BTS design would produce huge savings in deployment time and maintenance.
Mr Wang also spoke about how today, the legacy antenna systems had to be separate from the 5G AAUs. However, with Huawei’s Super Blade site design, all radio access technologies (RATs) across all bands would be supported in a single, compact design.Lastly, and this was a huge feature, was that the Huawei BTS design would support both standalone (SA) and non-standalone versions of the 5G standard. There was not enough detail on this, but if this is true, then it could have a tremendous impact on the planning processes of various operators globally.
Richard Yu, Executive Director of the Board and CEP of the Consumer Business Group, was the last of the speakers.
Mr. Yu spent considerable time highlighting Huawei’s rapid rise in the world of smartphones and connected devices. According to Yu, Huawei has spent nearly $11.3 billion in R&D in 2018 alone. This level of R&D intensity and the resulting innovations have helped Huawei ship over 200 million devices in 2018 with revenues topping $50 billion for the Consumer BG alone.
A big part of the growth story for Huawei’s Consumer BG was the increasing market share at the high end of the market, with steady traction in the market for devices over $600. Mr. Yu claimed 12% share of this category in 2018.
Mr. Yu also highlighted Huawei’s growth story in devices beyond smartphones, with growth in tablets (14%), PCs (335%) and wearables (120%) in 2018. All these devices combined accounted for over a 100 million units shipped.
The second major announcement for Huawei was the launch of the Balong 5000 5G chipset for smartphones. Huawei championed as the world’s most powerful 5G chipset for smartphones, a single chip, multi-mode modem that would support both NSA and SA flavors of 5G across both FDD and TDD frequency bands. Mr. Yu went to great lengths to highlights its superiority over the Qualcomm Snapdragon 845, which for all practical purposes is the world leader in this category.
Mr. Yu then went on to Huawei’s third major announcement at this briefing. That is, the launch of the 5G CPE Pro, a sleek device for the smart home segment. Powered by the Balong 5000, this device would receive a signal in the sub-6GHz bands and included support for the new WiFi 6 standard within the home.
At the end of the event, I was left impressed at the amount of ground covered across business units in so short a session. There were several takeaways for me from this pre-MWC briefing, as outlined below.
Huawei’s rise to becoming the number one vendor in the telecommunication infrastructure segment is no surprise. They have been firing on all cylinders and investing anywhere between $15–20 billion in R&D year on year. This level of R&D intensity, coupled with a shrewd vision of where the market is going, has helped the company make great strides in recent years, as the accumulated investments in R&D beginning to pay off across product lines. Huawei’s 5G product portfolio, as well as their street cred in claiming to be at the top, if not the outright leaders, in 5G, are well founded. Their product designs like the Super Blade sites are compact and modular and will generate significant savings on new sites.
Huawei appears to be attempting a pivot away from the telecommunication network business towards a more consumer and enterprise-centric version of the company. While it is not a stretch to believe that this is deliberate strategy as opposed to mere reactionary tactics, their ability to execute remains impressive. Huawei’s Balong 5000 announcement was striking in its frontal attack on the market-leading Snapdragon platform. Huawei has a long history as a client of Qualcomm, though the company has resorted to their in-house silicon for high-end phones in recent years. Given this context, Balong 5000 would be particularly striking if it will herald a larger Huawei shift towards an Apple-esque strategy of vertical integration. The more challenging strategy to execute would be to become a merchant silicon provider in the likeness of a Qualcomm. The latter approach will be tough to execute but given Huawei’s proximity to and influence with the massive Chinese device ecosystem, this strategy could prove to be very lucrative in the longer run.
There is no question that Huawei’s 5G leadership ambitions are facing strong headwinds. While several major Western countries and Japan have already banned Huawei equipment from being used in telecommunication networks, the debate is still ongoing in Europe. There are clear signs that France and Germany and other NATO countries may follow the US lead but there is resistance from major European telcos, with public remarks having been made by Vodafone and Deutsche Telekom citing the difficulties and cost implications of ripping Huawei out of their networks. Operators stand to benefit from the competitive intensity brought by Huawei and do not want to lose a valuable supply option for next-generation equipment. While the revenue impact to Huawei will not be a mortal blow (as it nearly was for ZTE), Huawei will suffer from being blocked out of future 5G network rollouts.
Finally, Huawei remains at risk that the #BanHuawei bandwagon will continue to roll on through other key markets. The biggest short-term threat is in European markets like Germany and France. However, Huawei would do well to pull out all stops to ensure that key emerging markets where they can leverage the large installed base of 4G networks remain open to them. For example, India is one such market where Huawei has significant market share and will be a bellwether for many emerging markets and regions. While India is not ready for 5G yet, the country has a chequered history with China and there remains the potential for a ban. In fact, Huawei was not amongst the initial list of invitees for Huawei trials. Markets like India, with their own digital ambitions, would do well to hedge their bets and remain open to Huawei but geopolitical risks will continue for Huawei in the short term. Huawei would do well to expend significant resources in raising awareness in markets like India, both amongst their core operator customer audience but also regulators and policymakers.