Huawei eyes computer market as US squeezes telecom business

Huawei will step up its presence in the global market for computer hardware, a top company official said on Wednesday, as the Chinese telecom giant weathers a US assault on its 5G network and smartphone business.

Deputy Chairman Ken Hu said the strategy is based on expectations that "incredible computing power" is going to be needed as the world turns too complicated and resource-hogging future technologies such as artificial intelligence and autonomous vehicles.

"We have a lot of challenges ahead of us. We need to beef up our computing power, explore new architectures, and develop processors that meet people's needs across all scenarios," Mr Hu said at a tech conference in Shanghai.

Huawei is already the world leader in telecom networking equipment, the No 2 smartphone producer, and is expected to dominate in ultra-fast future 5G networks.

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But it has been swept into the trade war between China and the United States, with its future prospects now in doubt owing to a US campaign to isolate the company.

Washington says Huawei equipment could contain security loopholes that allow China to spy on global communications traffic. The US has provided no proof and Huawei denies the charge.

A push into the market for computer architecture and software could add a new front in Huawei's battle with the Trump administration.

Mr Hu cited independent estimates saying the market will be worth more than US$2 trillion (S$2.8 trillion) by 2023, adding that Huawei would invest an additional US$1.5 billion toward that effort. He gave no timeframe or figures on the current investment.

"We will continue to invest," he said. "Starting with the most difficult challenge ahead of us - making breakthroughs in architecture - to developing processors, we're going to help expand the industry and build out the ecosystem."

The US is pressing allies, with mixed success, to reject Huawei's 5G technology and has threatened to cut it off from US components and services that it needs, such as the Android operating system that runs its phones.

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In August the US Commerce Department effectively suspended those sanctions for a second time, but the possibility of future implementation has placed a cloud of uncertainty over Huawei.

Meanwhile, Huawei expects the roll-out of next-generation 5G wireless networks to start contributing to the firm's revenue from next year when China launches services, Mr Hu said. Huawei said that it has secured more than 50 5G commercial contracts.

Mr Hu said that while the roll-out was accelerating, especially in Asia, the company believed that it would still need to "wait for a while before 5G contributes a sizeable share to revenue".

"We will have a clearer picture by mid-next year because by then the first batch of 5G commercial roll-outs in China will reach a certain phase," he told reporters on the sidelines of Wednesday's conference, estimating that Huawei had now signed about 60 contracts.

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China's big three state telcos are racing to roll out 5G services in more than 50 cities this year, following countries like South Korea and the US which have already started the service that promises to support new technologies such as autonomous driving.

Huawei's home market has become more crucial to the company since Washington in May banned US firms trading with it due to national security concerns, hitting the company's international business.

Huawei founder and CEO Ren Zhengfei last week told The Economist magazine that in order to resolve US concerns, he is open to selling his firm's 5G technology to Western firms for a one-off fee.

Mr Hu said that Mr Ren's suggestion was not complex and that a new player could help alleviate security concerns. "If the proposal gets implemented it will on one hand support more competition in 5G across the global supply chain, and such competition is beneficial to consumers and users and also contributes to the industry itself," he noted.

The company also on Wednesday launched what it described as "the world's fastest artificial intelligence training cluster", dubbed Atlas 900, and pledged to invest US$1.5 billion in its developer programme.

Huawei is scheduled to launch a new high-end smartphone on Thursday, despite uncertainty about whether the new handset will be able to run Google's Android operating system and apps.