Reuters
Published May 24, 2021 07:40AM ET
Updated May 24, 2021 11:00AM ET
By David Kirton
SHENZHEN, China (Reuters) - Founder of Chinese tech giant Huawei Technologies Ren Zhengfei has called on the company's staff to "dare to lead the world" in software as the company seeks growth beyond the hardware operations that U.S. sanctions have crippled.
The internal memo seen by Reuters is the clearest evidence yet of the company's direction as it responds to the immense pressure sanctions have placed on the handset business that was at its core.
Ren said in the memo the company was focusing on software because future development in the field is fundamentally "outside of U.S. control and we will have greater independence and autonomy".
As it will be hard for Huawei to produce advanced hardware in the short term, it should focus on building software ecosystems, such as its HarmonyOS operating system, its cloud AI system Mindspore, and other IT products, the note said.
Former U.S. president Donald Trump put Huawei on an export blacklist in 2019 and barred it from accessing critical U.S.-origin technology, impeding its ability to design its own chips and source components from outside vendors.
U.S. President Joe Biden's administration has given no indication it will reverse Trump's sanctions.
The blacklist also barred Google (NASDAQ:GOOGL) from providing technical support to new Huawei phone models and access to Google Mobile Services, the bundle of developer services upon which most Android apps are based.
Huawei's 2020 annual report did not break down how much of its 891.4 billion yuan ($138.70 billion) revenue was from its software.
OPEN SOURCE APPROACH
Ren's note also said the software push would depend on finding the right business model and that the company should adopt an open source approach, calling on staff to "absorb nutrients" through open source communities.
He said the company's Welink business communication platform had relied on traditional software licensing, which was unsuited to cloud computing and inferior to a rival product from tech giant Alibaba (NYSE:BABA).
Given the difficulty of working in the United States, Ren's note said the company should strengthen its position at home and build up its territory with a view to possibly excluding the United States.
"Once we dominate Europe, the Asia Pacific and Africa, if U.S. standards don't match ours, and we can't enter the U.S., then the U.S. can't enter our territory," it said.
Ren's note confirms a direction implied by previous announcements from the company that hinted at a shift away from handset hardware.
Rotating chairman Eric Xu in April said the company would invest more than $1 billion this year in its intelligent driving business.
It is also expanding its smart car partnership with state-owned Chongqing Changan Automobile Co Ltd to include the design and development of auto-use semiconductors, sources told Reuters earlier this month.
Apart from the pressure of sanctions, Huawei is known for its gruelling work culture and the note recommended the software teams should hire psychology professionals to help young recruits who might find the company emotionally challenging.
"Now some young people have high IQs, but their EQ might be low, and their mentality is not mature, and it's easy for them to get sick," Ren said.
($1 = 6.4270 Chinese yuan renminbi)
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.