As a leading ICT player, Huawei’s role in telcos’ digital transformation journeys is prominent. The President of Huawei Middle East & Africa, Steven Yi, spoke to Telecom Review in an exclusive interview about the telecom giant’s efforts to deliver a fully connected, intelligent world.
Despite global economic headwinds, Huawei solutions continue to perform remarkably well across domains. What are some of the key highlights with regards to the latest financial results?
Huawei generated $45 billion in revenue in the first half of 2022, with a net profit margin of 5.0%. The Carrier Business Group (BG) contributed $21.3 billion, the Enterprise BG $8.1 billion and the Device BG $15.1 billion. New business units like digital power and cloud grew rapidly, and ecosystem development efforts have entered the fast lane.Innovation underpins Huawei's continued success. Huawei's R&D investment reached about USD $22.38 billion in 2021, representing 22.4% of its total revenue and bringing its total R&D expenditure over the past ten years to over USD $132.5 billion. Huawei has one of the largest patent portfolios in the world. By the end of 2021, Huawei held more than 110,000 active patents across over 45,000 families. In 2021, Huawei had about 107,000 R&D employees, representing approximately 54.8% of our total workforce. According to WIPO, for the fifth consecutive year, Huawei Technologies was the top filer in 2021 with 6,952 published PCT applications. In 2021, Huawei rose from 49th to 44th on Fortune Global 500.
Huawei is leveraging its R&D capabilities in its ambitious diversification drive. The company launched the Huawei Digital Power unit last year to digitize the energy sector. Digital Power is committed to integrating digital and power electronics technologies, developing clean power and enabling energy digitalization to drive energy revolution for a better, greener future. Its unique value lies in its long-term R&D investment in digital and power electronics technologies.
The MEA region is dynamically evolving into digital. How would Huawei solidify its position in delivering a fully connected, intelligent world in this particular area?
Innovations in 5G, cloud, AI and other fields are pushing the digital economy into a new development phase. The Middle East is ahead of many other regions in this respect. Because of the fast roll-out of 5G, for example, some countries in the region serve as a tangible proof point of how technology can help to advance the development of all industries, especially when integrated with technologies such as cloud and AI.Therefore, we see clear opportunities to support Middle East organizations in their digital transformation and reimagine the future. It involves bringing technological advances to even more industries and creating new value by helping governments and enterprises go digital while operating more intelligently.
The fourth industrial revolution (4IR) has touched all corners of the globe. In this context, what we have tried to do at Huawei is keep innovating to create value for our customers, our partners and society. By doing that, we have achieved growth and many other shared successes.
In light of digital transformation trends in the region, which Huawei solutions are being adopted the most in ME markets? What could be the reason behind this?
We are a leading 5G partner for carriers in the region. Third-party test results have found that 5G networks built by Huawei for customers in many countries, including Saudi Arabia, UAE, Switzerland, Germany, Finland, the Netherlands and South Korea, provide the best user experience. Huawei has signed over 3,000 commercial contracts for industrial 5G applications by working with carriers and partners. These 5G applications are currently seeing large-scale commercial use in various verticals. Dell'Oro Group, a market research firm for the telecom industry, highlights that Huawei still leads the telecoms kit market despite a challenging global marketplace, according to a market analysis report in Q4 2021.Thanks to continuing digital transformation trends, Huawei's enterprise business continues to grow rapidly in the region. In 2021, Huawei launched 11 scenario-based solutions for key sectors such as government, transportation, finance, energy and manufacturing. Over 700 cities and 267 Fortune Global 500 companies have chosen Huawei as their digital transformation partner, and Huawei now works with more than 6,000 service and operation partners worldwide.
Our cloud platform, meanwhile, continues to outperform competitors. Now the fastest-growing cloud services provider in the world, HUAWEI CLOUD has attracted 2.6 million developers, 28,000 consulting partners, 9,000 technical partners, and released 6,100 Marketplace products five years since launch. The new HUAWEI CLOUD Everything-as-a-Service strategy envisions a future where all infrastructure and applications will be cloud-based. Additionally, we encourage enterprises to embrace AI fully and let data play its part in supporting operational decision-making as part of Technology as a Service. Ultimately, the right strategy as the intelligent world develops should be all-digital, all-cloud, AI-driven and everything as a service, including Infrastructure as a Service, Technology as a Service and Expertise as a Service.
Our Middle East cloud strategy is to bring services closer to our customers. We launched the Abu Dhabi cloud region in 2020, followed by an announcement this year of a Saudi Arabia region to be launched soon. Then in July of this year, Kuwait's Communication and Information Technology Regulatory Authority (CITRA) granted permission to HUAWEI CLOUD to offer cloud services in Kuwait, as the GCC country pursues a cloud-first policy.
To cultivate an even stronger technology ecosystem in the region, we announced the Huawei Developer Competition, aimed to promote a solid, open and robust cloud ecosystem. The competition, themed "Spark Infinity" this year, encourages developers to adopt leading technologies into creative projects and applications. We also launched the Huawei Cloud Startup Program to provide startups with access to financial and technical support, and go-to-market encouragement for promising startups.
To enrich our customers' digital experiences, Huawei is keen to deepen the developer ecosystem, building on the current 2.6 million developer base. Huawei Apps UP Contest, launched in June, has set aside over USD $1 million in prize money to encourage developers to build an app ecosystem that intelligently connects everything. The 2022 edition of the competition saw the launch of the Best Arabic App in the Middle East and Africa for developers to build app solutions customized to the region's demographic, an initiative we will continue supporting in years to come.
How does Huawei cultivate high-level stakeholder relationships across business domains and verticals?
For the past 20 years, we have endeavored to create a win-win scenario for our Middle East customers, partners and the communities we serve. We have brought the most advanced technologies to drive digital transformation in the region, invested in ICT talent development through various CSR initiatives and supported community-building events such as GITEX Global, GISEC Global, LEAP, Milipol and more. We have partnered with governments to protect mission-critical data from cybercrime and helped accelerate economic growth through strategic investments in human capital, facilities, supply chains, labs and, in the recent past, cloud data centers in some countries in the region.Committed to creating further value in a society empowered by connectivity and the digital economy, which technologies is Huawei focusing on in the upcoming years?
Supporting our customers' shift into a digital and intelligent world will be our primary objective moving forward. The next decade will see the 5.5G vision become a reality, enabling a 10 Gbps experience and a hundred billion connections. This will require frequent innovation to accommodate the new Gigabit scenarios. GSMA recommends an average of 2GHz mid-band per country is necessary as spectrum reserve for mobile, supporting downlink capacity with higher spectrum efficiency and large antenna array technology.We will continue to invest and innovate with Huawei Digital Power. Huawei's focus on renewable energy is on converging and innovating technologies to accelerate the digitalization of energy and enable various industries to upgrade. We aim to accelerate clean energy generation, build green transportation, sites and data centers, and ultimately contribute to zero-carbon buildings, campuses and cities.
Another major priority for Huawei is cybersecurity. Cybersecurity is a shared responsibility, and collaboration remains the best way to tackle cyber threats. Together, governments, standards organizations and technology providers can develop a unified understanding of cyber security challenges. Huawei reiterates its commitment to communicating and collaborating with all stakeholders in an open, transparent and responsible manner to jointly improve cybersecurity and privacy capabilities for customers.
We will continue to invest in ICT talent development in the region. A digitally-driven region requires knowledgeable, talented individuals to move into the next era of connectivity. Through investments in programs like our Seeds for the Future CSR initiative, Huawei ICT Competition and many others, we are promoting collaborations between public and private sector entities, educators and technology companies to develop talent. In the Middle East, Huawei has set up 163 Huawei ICT Academies, and more than 3,500 students have participated in the flagship program Seeds for the Future, while over 37,000 people have obtained Huawei certification. We also have trained over 120,000 ICT talents for the Middle East.
As a leading global provider of ICT infrastructure, how will Huawei continue facilitating green and sustainable development?
Huawei's share in global ICT infrastructure currently stands at more than 30% as a major supplier of ICT infrastructure. We have always believed that the biggest value Huawei can bring to advance the green agenda is to use continuous technology innovation to help all industries enhance the ICT infrastructure energy efficiency and achieve low-carbon development. Huawei's vision is to integrate digital and power electronics technologies, develop green power and enable energy digitalization for a better, greener future.Huawei will continue to invest in foundational digital power technologies, developing clean power and promoting energy digitalization. We are doing this today through Huawei Digital Power, including many strategic projects in the Middle East. Huawei Digital Power looks at five areas of business globally: Smart PV, data center facilities, site power facilities, mPower for electric vehicles and EV charging system. Huawei Digital Power sees the Middle East region and the Gulf specifically as one of "strategic importance" to the company as it seeks to contribute to a low-carbon, smarter society powered by digital technologies. More specifically for the region, Smart PV and green data center facilities are essential.
In the UAE, for example, we have partnered with a regional customer to build solar-powered data center. The 100MW facility will use 100% green energy, making it the largest solar data center in the Middle East and Africa.
Where do you see the telecoms and ICT sector heading in the MEA region? Will we see new trends emerging?
We will continue to see the region pioneering next-generation telecom technologies as it did with 5G. We see increased interest with 5.5G as its potential becomes apparent. 5.5G will deliver a 10 Gbps experience through MIMO technology that boasts larger bandwidth, higher spectrum efficiency and higher-order modulation. With next-generation technologies like FTTR, Wi-Fi 7, 50G PON and 800G, F5.5G will bring a 10 Gbps experience everywhere.Second, 5.5G will go beyond connectivity to include sensing, resulting in a wealth of new scenarios and applications. Wireless and fiber sensing technologies will be used in vehicle-road collaboration and environment monitoring. Passive IoT will integrate cellular and passive tag technologies to create 100 billion potential connections. 5.5G core networks will redefine architectures and foundational technologies to enable new service scenarios, such as industry private networks and industrial field networks.
Third, diversified computing will enable diversified applications. In the 5.5G era, computing architectures will be redefined to increase computing efficiency by 10-fold through chip engineering and full peer-to-peer interconnection architectures.
We are strong supporters of the Middle East region's green ambitions and the strategies of countries like the UAE, Saudi Arabia and others to move towards carbon neutrality. Many of our carrier partners also desire to participate in climate change action. Therefore, we see an opportunity to support these partners to optimize energy by building energy-efficient sites, networks and operations through the Huawei Digital Power unit. Through the "More Bits, Less Watts" strategy, we support our partners to reduce their carbon footprint while lowering energy expenses to meet their cost reduction goals. Improvements to energy efficiency will benefit operators in three ways. First, user migration, site upgrades and network power reduction will bring them OPEX savings. Second, improved energy efficiency will support migrating 2G and 3G users to 4G and 5G services. Third, operators' efforts to reduce their carbon footprint will positively impact the environment, helping them better fulfill their social responsibilities.
Cloud is one of the key foundational components for transforming a telecommunications company into a digital service provider. Therefore, most regional operators are exploring cloud architectures that allow them to add services more quickly, respond faster to changes in demand and centrally manage their resources more efficiently. Huawei has distilled its over three decades of telecom experience and cloud expertise into the following key factors for carrier cloud transformation: first, the selection of a transformation strategy by factoring in a carrier's advantages; second, the planning of a transformation path considering data security, system stability and service agility; and third, the selection of a trusted, experienced and competent partner for win-win collaboration.
As a global ICT leader, Huawei will continue boosting economic growth, creating employment opportunities and enabling the digital transformation of industries across the Middle East and the world. Huawei will support local and regional industry ecosystems and SMEs while developing digital talents in all our markets. We will continue creating shared value and driving sustainable development for the ICT ecosystem.
