Chinese Huawei is looking to ports and factories to rebuild sales – The Diplomat

While technicians in a remote control room watch displays, a robotic crane at one of China’s busiest ports shifts cargo containers from a Korean cargo ship onto self-driving trucks, in a scene that tech giant Huawei sees as its future after US sanctions crush its smartphone brand. .

The backbone of the “smart terminal” in the port city of Tianjin, east of Beijing, is a data grid built by Huawei, which is reinventing itself as a supplier of self-driving cars and the factories and other industries it hopes will be less vulnerable to it. Washington’s escalating dispute with Beijing over technology and security.

The ruling Communist Party has been promoting automation in industries from manufacturing to taxis to keep China’s economy growing as the workforce ages and begins to contract. Its managers say the “smart terminal”, a 200-square-kilometre (77-square-mile) section of Tianjin’s port, allows 200 employees to transport the largest amount of cargo that was used by 800 employees.

“We believe this solution in Tianjin is the most advanced in the world,” said Yu Kun, chief technology officer of Huawei’s Ports business unit. “We think it can be applied to other ports.”

Huawei Technologies Ltd. has suffered. Inc., which makes smartphones and is the world’s largest supplier of networking equipment to phone companies, after then-President Donald Trump cut off access to US processor chips and other technology in 2019 in a dispute with Beijing over security.

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Washington says Huawei poses a security risk that could use its access to foreign phone networks to facilitate Chinese espionage, an accusation the company denies. The United States and its allies, including Japan and Australia, have banned or restricted the use of Huawei equipment by their phone companies.

Smartphone sales outside China collapsed after Huawei lost music, maps and other services from Alphabet Inc.’s Google. , which cellphone buyers expect to see pre-loaded. Its low-end Honor brand was sold off in 2020 in hopes of reviving sales by decoupling it from parent company sanctions.

Huawei, with a workforce of nearly 200,000, has maintained its position as the leading maker of network equipment based on sales in China and other markets where Washington has had little success in encouraging governments to shun the company.

“Huawei is already a major player” in data networks with “a wealth of knowledge,” said Paul Bode, an industry analyst.

The company has set up 20 teams to focus on factories, mines, hospitals, ports, power stations and other industrial customers. It says the automotive unit has 3,000 people engaged in autonomous driving and has invested $2 billion in the technology in 2020-2021. Huawei was an early developer of “smart city” networks for traffic control and police surveillance.

“The big black cloud here is geopolitics,” Bodhi said. “This will hinder its participation in foreign markets,” he said. “The issues are not technological but purely political.”

US pressure on Huawei escalated into an international confrontation in 2018 after the company’s chief financial officer, Meng Wanzhou, daughter of its founder, was arrested in Canada on US charges related to accusations of violating trade sanctions against Iran.

China arrested two Canadians on charges of espionage, in an attempt to free Meng. They were released in September 2021 after Meng was allowed to return to China under an agreement with US prosecutors in which she was held responsible for misrepresenting Huawei’s dealings with Iran.

Huawei says its new focus is already helping to revive the company’s fortunes.

“In 2020, we have successfully pulled ourselves out of crisis mode,” said Eric Xu, one of the three Huawei executives who take turns as chairman, in a letter to employees in December. “American restrictions are now our new normal, and we are back to business as usual.”

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Xu said last year’s revenue was expected to change slightly from 2021 at 636.9 billion yuan ($91.6 billion). This was lower than Huawei’s double-digit growth a decade ago, but an improvement from a 5.9 percent decline in the first half.

He did not elaborate by business type, but Huawei reported 2021 sales to industrial customers of 102.4 billion yuan ($16.1 billion). Sales of smartphones and other devices fell 25.3% year-on-year in the first half of 2022 to 101.3 billion yuan ($15 billion).

The automotive unit, which provides components and software for navigation, dashboard displays, and vehicle systems management, has played a role in five models released by three Chinese automakers.

The ruling party’s urgency to automate has grown as the size of China’s working-age population has declined from 16 to 59, after peaking in 2011. This group has shrunk by about 5 percent. Its share of the population decreased from 70% to 62%.

Tianjin port managers have told Huawei that they are already having trouble finding and retaining truck drivers, according to Yue.

“This can help address the problem of population aging,” Yu said.

Yue said Huawei has spoken with “people outside of China” who might use its port technology, but he gave no details.

The annual market for port-linked networking technology is a modest $2 billion, but global sales of equipment to connect factories, medical equipment, automobiles, and other devices total $600 billion annually, according to Bode. It would replace Huawei’s missing smartphone and other telecom sales, he said, as long as foreign buyers were not put off by security concerns.

Tianjin Port’s fleet of 88 battery-powered self-driving trucks is being shipped by wind turbines, according to a port spokesperson, Peng Bai.

“It’s safer, and it uses clean energy,” Bing said.

In the control room on the third floor with floor-to-ceiling windows looking out over the port, a dozen operators sit in front of monitors with as many as six screens showing video channels of computer-controlled cranes that lift cargo boxes onto or off ships. Each can monitor up to six cranes simultaneously, unlike a traditional operator who only services one vessel.

“People had to work at the top of the cranes,” said Yang Jimin, vice president of the Tianjin Port Group. “Now, our operators can sit at a desk and monitor equipment remotely.”

Operators take control of a crane or truck if sensors indicate a problem, according to Huawei’s Yue. He said the port’s goal is to bring the “takeover rate” down to 0.1 percent, or one container out of 1,000, while computers manage to handle the rest from start to finish.

The high-speed network allows a crane or truck to react to a command in 1/100th of a second, even though the ships are 500 meters (one-third of a mile) from the control room, according to director Liu Xiwang of the port’s information department.

“You can’t feel late,” Liu said.

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Yue, Huawei’s chief executive, has been reluctant to say whether it needs processor chips or other foreign inputs that could be disrupted by US sanctions.

“I really don’t know the answer to your question,” Yue said after being asked twice about the sources of the critical ingredients. Compare it to buying a cup of coffee: “I don’t know who supplies the cup, the coffee beans, and the water.”

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