Huawei plans to reorganize traditional network equipment business after a rise in smartphones sales draws attention
Huawei Technologies intends to restructure its network gear sector after its consumer products business contributed the most to record sales numbers in 2018, and has set the impressive target of tripling the revenue for the entire group within a five-year period.
The company is currently the world’s leading equipment provider, and its focus will be shifted to reorganization of its carrier segment. In a March 29 internal meeting Huawei founder and CEO informed that the underlying reason is in the fact that this particular sector has been primarily under US fire.
“Eric Xu Zhijun said our company has only led the world in telecoms equipment products for one to two years. If we don’t have special products, if we don’t have products that are sharp and irreplaceable …[our competitors] will catch up in two years,” Ren claimed, according to a transcript of the meeting publicly made available by the company’s official website. For those not in the know - Xu is one of company’s rotating chairmen.
Huawei made its move following a major rise in sales figures in 2018, which clearly signifies the considerable gains made by Chinese brands both domestically and internationally.
Just last week, Huawei informed of a 19.5% surge in annual revenue (721.2 billion yuan, or $107 billion) last year, which was a difficult year, with the US government attempting to block the use of Huawei’s 5G equipment internationally.
Huawei’s consumer business revenue rose 45% to 348.9 billion yuan, while the company’s carrier segment remained largely at the same level at 294 billion yuan.
The lack of growth in sales of telecom equipment was mostly due to the lowered international demand, since many carriers intend to move from 4G to 5G networks. Nonetheless, 2015-2017 showed a decline in capital expenditures, while 2018 was more stable, while a new report from the Dell’Oro Group last week predicted that capital expenditure growth will be greater than operator revenue in 2019-2022, since the focus will shift to rolling out 5G services.
The company, which is based in Shenzhen, intends to invest $100 bullion in R&D up to 2024 in order to redesign its network architecture, enhance cybersecurity and protect privacy of users, said Ren.
Another fact that came out of the meeting is that Ren had set a preliminary group revenue target at $250-$350 billion by 2023, and, simultaneously, a sales target of $150 billion for the consumer business group.
If the above levels are achieved, the company will triple in size as far as revenue is concerned. Huawei is also planning to optimize the structure and compensation system of the consumer business unit in 2019-2024 in order to achieve this goal.Source