Bits and Splits - stock.adobe.co
The controversy surrounding Huawei’s alleged links to the Chinese government, and an effective ban on the use of its equipment in the US, has failed to put any kind of dent in the firm’s finances, as it reported record profits and revenues for 2018.
As sales rose 19.5% to CNY 721.2bn ($107.3bn or £82.3bn), Huawei has now joined an “elite” tier of technology companies with annual revenues of more than $100bn.
Its global clout now dwarfs rivals such as Cisco, which made sales of $49.3bn last year, and puts the Chinese networking supplier in the same leagues as companies such as Google parent Alphabet ($136.8bn of revenues in 2018) and Microsoft ($110.4bn). Net profit, meanwhile, rose 25.1% to CNY 59.3bn ($8.8bn or £6.7bn)
Much of this growth came from Huawei’s Consumer Business Group, which includes its bestselling smartphone brands, including sub-brand Honor, where sales rose 45%, representing 48.4% of the company’s total revenues.
Revenues at its Enterprise Business Group were up 23.8%, but down 1.3% at its Carrier Business Group, which sells into telecoms and mobile operators and is therefore the source of much of the controversy.
In its annual report, Huawei appeared to hint that the furore might even be helping it by increasing peoples’ awareness of the firm, which until recently was virtually unknown to the general public outside of China.
According to a recent Ipsos report cited by Huawei, overall brand awareness of the firm has increased to 88% in the past 12 months, and brand consideration among global consumers is up 2% to 44%. It also has net promoter scores in the top three in a number of high-income countries, including Germany, Italy and Spain. It said it believed consumers had come to view it as a trustworthy brand.
In remarks quoted by Reuters, rotating chairman Guo Ping directly addressed the US government’s outspoken views on its activities: “The US government has a loser’s attitude. It wants to smear Huawei because it cannot compete against Huawei. I hope the US can adjust its attitude,” he said.
“The easiest way to bring down a fortress is to attack it from within and the easiest way to reinforce it is from outside. Moving forward, we will do everything we can to shake off outside distractions, improve management, and make progress towards our strategic goals,” said Ping.
Huawei chairman Liang Hua added: “At present, however, a great cloud of political and economic uncertainty looms over global markets. The world is changing and we are facing new challenges. But Huawei will stay the course. We will work with our customers and partners to build an ecosystem that thrives on shared success. And we will do our best to push the limits of technology and promote social progress along the way.
“We will continue to engage governments, local communities, and our customers in active, open, and transparent dialogue. Together, we will make ICT infrastructure more secure and maximise its value.
“We have long-term, effective mechanisms in place to facilitate collaboration and regular communications on cyber security challenges with national governments in the UK, Canada, Germany, France, and other nations.
“To bolster these efforts, we opened a Cyber Security Transparency Centre in Brussels in March 2019. Moving forward, we will continue to promote this open and transparent approach to security management in other parts of the world.”
Dark clouds linger
Despite its optimism, controversy continues to dog Huawei in Europe and North America. On 28 March, a report from the UK’s Huawei Cybersecurity Evaulation Centre (HCSEC) Oversight Board slammed the company and said it had made no material progress on addressing a number of issues it had previously raised.
In the US, Susan Gordon, principal deputy director of national intelligence, told a conference in Texas that the federal government was now trying to figure out ways of living with Huawei’s presence in global 5G networks, which could include tighter encryption protocols and more use of network slicing and segmentation.
“We are going to have to figure out a way in a 5G world that we’re able to manage the risks in a diverse network that includes technology that we can’t trust. You have to presume a dirty network. That’s what we’re going to have to presume about the world,” said Gordon.
Although the US has previously made thinly veiled threats to allies such as the UK over its use of Huawei equipment, Gordon’s remarks suggest there is still some pragmatism in Washington, coming just days after the European Union (EU) instructed its member states to introduce new reporting standards and procedures around the security of their critical national communications networks, but stopped short of implementing a ban on Huawei, saying this was up to individual members.
Read more about the Huawei affair
- Huawei has made no material progress on addressing the issues identified last year by the NCSC, according to the latest highly critical report from its HCSEC Oversight Board.
- The chair of the Science and Technology Committee has criticised the government’s vague response to concerns about Huawei’s activities in the UK.
- Vodafone’s CTO and general counsel have defended their use of Huawei equipment in their mobile network and challenged its detractors to show them evidence of wrongdoing.
- Huawei has filed a lawsuit accusing Washington of violating the US Constitution by banning it from government contracts.
- US secretary of state Mike Pompeo has reinforced his attacks on Huawei as the firm apparently prepares to sue the US government over its federal-level ban.
- US secretary of state Mike Pompeo has said America may scale back or cut military and diplomatic ties with countries that use Huawei equipment in national 5G networks.
- NCSC CEO uses cyber security conference in Brussels to set out his agency’s position on Brexit, 5G security, Huawei, market incentives and international cooperation on active cyber defence.
- A think tank report has branded the UK government naïve at best, irresponsible at worst, over its use of Chinese networking equipment in critical national infrastructure.
- Huawei CEO Ren Zhengfei has taken a more combative stance in the ongoing row over the firm’s alleged links to the Chinese intelligence services.
- The UK’s National Cyber Security Centre suggests Huawei will be allowed to form core elements of the country’s 5G mobile network infrastructure after all.
- Huawei’s Ryan Ding tells the British government that the company has never, and will never, use its technology to assist the Chinese intelligence services.
- Malaysia has become the latest country to look into the security concerns surrounding Huawei, which has been accused by mostly western powers of conducting corporate espionage.
- Vodafone’s UK CEO has said the operator will “pause” its use of Huawei hardware for the foreseeable future.
- The chair of the cross-bench Science and Technology Committee has written to Huawei seeking answers over its activities in the UK.
- Huawei’s rotating chairman Guo Ping outlines the firm’s priorities to optimise its product portfolio, empower employees and build a more resilient business structure.
- While the number of countries with Huawei bans in place grows and more issue warnings, a German investigation found no evidence of spying to support the fear.
- The Chinese government has called for the release of Huawei chief financial officer Meng Wanzhou, who was detained in Canada at the weekend.
- BT will remove Huawei’s networking equipment from the core of EE’s 4G mobile network.