China’s Huawei is looking for ports and factories to restore sales

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TIANJIN, China — As technicians in a remote control room monitor display screens, an automated crane at one of China’s busiest ports moves cargo containers from a Korean truck to self-driving trucks as tech giant Huawei considers its future after US sanctions crippled its smartphone. brand.

At the heart of the “intelligence terminal” at the port of Tianjin, east of Beijing, is a data network built by Huawei, which is reinventing itself as a supplier of self-driving cars, factories and other industries it hopes are less vulnerable to Washington. . and worsening tensions with Beijing over technology and security.

The ruling Communist Party is pushing automation in industries from manufacturing to taxis to keep China’s economy growing amid an aging and shrinking workforce. Part of the 200-square-kilometer (77-square-mile) port of Tianjin, the “intelligent terminal” will allow 200 workers to handle the previous 800 cargoes, its officials said.

“We believe that this solution in Tianjin is the most advanced solution in the world,” said Yue Kun, CTO of Huawei Ports Business Unit. “We believe this can be applied to other ports.”

Huawei Technologies Ltd. is the world’s largest supplier of smartphones and network equipment to phone operators. then-President Donald Trump fought a security dispute with Beijing in 2019 after it cut off access to chips from US processors and other technology.

Washington has accused Huawei of being a security risk that it could use access to foreign phone networks to facilitate Chinese espionage, a charge 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 carriers.

Smartphone sales outside of China Huawei is Alphabet Inc. It fell after losing Google’s music, maps and other services that phone buyers expect to come preloaded. Its low-end Honor brand was sold in 2020 in hopes of boosting sales by separating it from sanctions on its parent company.

Huawei, which has a workforce of about 200,000, has maintained its status as the leading network equipment maker based on sales in China and other markets where Washington has had little success in encouraging governments to stay out of the business.

“Huawei is already a major player in data networks with ‘richness’,” said industry analyst Paul Budde.

The company has established 20 groups to focus on factories, mines, hospitals, ports, power plants and other industrial customers. It has 3,000 people working on self-driving in its auto division and is said to have invested $2 billion in the technology in 2020-21. Huawei was the first developer of “smart city” networks for traffic control and police surveillance.

“The big dark cloud here is geopolitics,” Budde said. “This will prevent it from participating in foreign markets,” he said. “The problems are not technological, only political.”

US pressure on Huawei reached an international standoff in 2018 after its chief financial officer, Meng Wangzhou, the founder’s daughter, was arrested in Canada on charges of violating US trade sanctions against Huawei. Iran.

China has arrested two Canadians accused of espionage in an attempt to free Meng. They were released in September 2021 after Meng was allowed to return to China under a deal with US prosecutors, where he pleaded guilty to tampering with Huawei’s dealings with Iran.

Huawei says its new direction is already helping to revive the company’s bottom line.

“In 2020, we have successfully emerged from crisis mode,” Eric Xu, one of three Huawei executives transitioning as chairman, said in a letter to employees in December. “US restrictions are now our new normal, and we are back to business as usual.”

Last year’s revenue is expected to be little changed from 2021 at 636.9 billion yuan ($91.6 billion), Xu said. That was lower than Huawei’s double-digit growth a decade ago, but an improvement from a 5.9% decline in the first half.

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

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

The ruling party’s urgent push for automation has grown as China’s 16- to 59-year-old working-age population has shrunk since peaking in 2011. This group decreased by about 5%. Its share in the population decreased from 70% to 62%.

Tianjin port officials told Huawei they were struggling to find and retain cargo carriers, Yue said.

“It will help solve the problem of population aging,” Yue said.

Yue said Huawei has spoken to “people outside of China” who might use its port technology, but he did not provide any details.

The annual market for port network technology is $2 billion, but global sales of equipment to connect factory and medical equipment, automobiles and other devices are $600 billion a year, according to Budde. He said he has the ability to replace lost smartphones from Huawei and other telecom sales, as long as foreign buyers are not concerned about security concerns.

Port of Tianjin’s 88 self-driving battery-powered trucks will be powered by wind turbines, according to port spokesman Peng Pai.

“It’s much safer and uses cleaner energy,” Peng said.

In a third-floor control room with floor-to-ceiling windows overlooking the harbor, dozens of operators sit in front of up to six screens showing video footage of computer-controlled cranes hoisting cargo boxes on or off ships. Each can monitor up to six cranes at the same time, unlike a traditional operator who only serves one vessel.

“People had to work on cranes at height,” said Yang Zemin, vice president of Tianjin Port Group. “Now our operators can sit at their desks and monitor equipment remotely.”

According to Huawei’s Yue, operators can take control of a crane or truck if sensors indicate there is a problem. He said the port’s goal is to reduce this “processing rate” to 0.1%, or 1,000 containers, while computers manage the processing of others from start to finish.

The high-speed network allows the crane or truck to respond to the command in 1/100 of a second, even if the vessels are 500 meters (one-third of a mile) away from the control room, said company director Liu Siwang. port information service.

“You can’t feel the lag,” Liu said.

Huawei chief Yue declined to say whether it needs processor chips or other foreign inputs that could be hampered by US sanctions.

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

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