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This past year may not have been quite the international breakthrough Huawei executives wanted, but it still turned out to be pretty darn good, despite an increasingly hostile political environment for the Chinese tech giant.
Two developments on Thursday perfectly encapsulated the whipsaw year Huawei has experienced.
First, in an earnings preview the company said 2018 revenue is projected to be $108.5 billion, up 21 percent year-on-year. That includes 26 new contracts for 5G — one of the most hotly contested markets and a source of contention in countries such as the U.S., which asserts Huawei’s ties to China’s central government make its equipment a security threat.
This leads to the second development: Reuters reports President Donald Trump is weighing a new executive order that would invoke national emergency powers to prevent U.S. companies using telecommunications equipment from Huawei and fellow Chinese company ZTE.
This comes just after Huawei announced that it shipped 200 million smartphones in 2018, up roughly one-third from 2017, when it shipped 153 million.
So while 2018 was a big year for Huawei, there was also quite likely a sense that it could have been even bigger.
Rolling into 2018, Huawei had its eyes on the U.S. market. But a possible partnership with AT&T for 5G networks and smartphones crumbled amid political pressure from Trump and U.S. lawmakers. In March, retailer Best Buy also announced it was ditching Huawei products.
Huawei continued to insist there were no security issues, either with its phones or its telecom gear. At a Paris event to roll out its new P20 series of smartphones, the company tried to signal its global ambitions. The Huawei P20 Pro and Mate 20 Pro sport impressive cameras and nifty AI-powered features.
The event included a video called “Trust in our global partners” that offered gushing testimonials from executives at European carriers, such as France’s Orange, U.K.’s Vodafone, Germany’s Deutsche Telekom, and Spain’s Telefonica.
They praised Huawei as a “leading innovator” and talked up their cozy relationships with a company they argue is pushing the edge of technology. Indeed, this highlights a dilemma many countries are facing. Huawei is one of the biggest spenders on R&D for telecom, and its 5G gear and smartphones are rated highly. It’s not easy to say no when every country wants to have the latest and greatest for its citizens.
Yet the U.S. continues its push to shut out Huawei and convince allies to do the same — certain that the security risks outweigh the technological benefits. Australia has banned Huawei gear, as has New Zealand. And there have been reports that Japan and France are considering doing the same, though no official actions have been taken.
All this seemed to come to a head a few weeks ago with the arrest of Huawei’s chief financial officer, Meng Wanzhou — also the daughter of its billionaire founder, Ren Zhengfei — in Canada in connection with a demand from the U.S.
Huawei has tried to quell this backlash with assurances of its independence and promises to spend more on cybersecurity. But with deteriorating trade relations between Trump and China, it seems unlikely the company’s going to make any progress in the U.S. market in the coming year.
Still, its 2018 results indicate these controversies aren’t holding the company back in the short-term. The real question for 2019 is whether Huawei can continue its global march in more hospitable regions and avert any additional bans.
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