At a busy port in China, technicians in a remote control room monitor automated cranes as they transfer cargo containers from a Japanese ship to autonomous trucks. This vision is one that Huawei, a technology giant, sees as its future, following the impact of American sanctions on its smartphone business.
Huawei, a company that is pivoting towards becoming a provider for autonomous vehicles, factories, and other industries, has built the data network infrastructure for the smart terminal at the Tianjin Port. This shift is in response to the negative effects of the escalating tensions between the US and China over technology and security on its smartphone manufacturer business.
China’s Communist Party is encouraging automation in various industries such as manufacturing and transportation in order to maintain economic growth as the population ages and the workforce decreases. The smart terminal at the Tianjin Port, which is part of a 77 square mile area, utilizes technology to increase efficiency, allowing 200 employees to handle the same amount of cargo as 800 employees did previously.
“We believe this solution in Tianjin is the world’s most advanced,” said Yue Kun, CTO of Huawei’s ports business unit. “We believe it can be applied to other ports.” Huawei Technologies, a company known for its smartphones and as the largest global supplier of network equipment for phone carriers, faced challenges after former President Donald Trump restricted access to American processor chips and other technology in 2019, due to a dispute with Beijing over security.
The US government claims that Huawei poses a security threat and may use its access to foreign phone networks to aid Chinese espionage, an accusation that the company denies. The United States and other countries such as Japan and Australia have prohibited or restricted the use of Huawei equipment by their phone carriers.
Huawei’s smartphone sales outside of China drastically decreased after the company lost access to services such as music, maps, and others from Alphabet Inc.’s Google that customers typically expect to be pre-installed on their devices. In 2020, the company sold off its low-end Honor brand in an attempt to revive sales by distancing it from the sanctions placed on the parent company
Despite its struggles, Huawei, a company with a workforce of nearly 200,000, has maintained its position as the top manufacturer of network equipment based on sales in China and other markets where the US has had limited success in convincing governments to avoid doing business with the company. Huawei is already a significant player in data networks with a vast amount of expertise, according to Paul Budde, an industry analyst.
In order to tap into new markets, Huawei has formed 20 teams focused on serving factories, mines, hospitals, ports, power plants, and other industrial clients. The company’s automobile unit has 3,000 employees working on autonomous driving technology and invested $2 billion in the field in 2020-2021. Huawei was an early developer of smart city networks for traffic management and police surveillance.
However, Budde also added that “The big, black cloud here, however, is geopolitics,” and it will impede its participation in overseas markets. The issues are not related to technology but are purely political. The pressure from the US on Huawei escalated into an international confrontation in 2018 after its CFO, Meng Wanzhou, daughter of its founder, was arrested in Canada on US charges related to allegations of violating trade sanctions on Iran.
Huawei claims that its new focus is already contributing to the company’s recovery. In a letter to employees in December, Eric Xu, one of three Huawei executives who rotate as chairman, stated that “In 2020, we successfully pulled ourselves out of crisis mode..U.S. restrictions are now our new normal, and we’re back to business as usual.”
Last year’s revenue was forecast to be little changed from 2021 at 636.9 billion yuan ($91.6 billion), Xu said. That was below Huawei’s double-digit growth of a decade earlier but an improvement over the 5.9% slide in the first half.
He gave no breakdown by business line, but Huawei reported 2021 sales to industrial customers of 102.4 billion yuan ($16.1 billion). Sales of smartphones and other devices fell 25.3% from a year earlier in the first half of 2022 to 101.3 billion yuan ($15 billion).
Last year, Huawei’s revenue was projected to remain relatively unchanged from 2021 at 636.9 billion yuan ($91.6 billion), according to Xu. Though this is below the double-digit growth that the company experienced a decade ago, it was still an improvement over the 5.9% decline in the first half of the year. No breakdown by business line was provided, but Huawei reported 2021 sales to industrial customers of 102.4 billion yuan ($16.1 billion). Additionally, sales of smartphones and other devices fell 25.3% year-over-year in the first half of 2022 to 101.3 billion yuan ($15 billion).
The auto unit of Huawei, which provides components and software for navigation, dashboard displays and managing vehicle systems, has participated in the release of five models from three Chinese automakers. The ruling party’s urgency to implement automation has increased as the size of China’s working-age population (16 to 59) has dropped since it reached a peak in 2011, shrinking by around 5%. The proportion of the population in this age group has also decreased from 70% to 62%
According to Yue, the managers of the Tianjin port had informed Huawei that they were facing difficulties in recruiting and retaining truck drivers. He stated that “This can help to address the aging population issue,” and added that Huawei has had discussions with individuals outside of China who might use its port technology, but he did not provide any further information.
According to Budde, the annual market for port-related network technology is relatively small at $2 billion, however, global sales of gear for connecting factory and medical equipment, cars, and other devices total $600 billion annually. He stated that this has the potential to make up for Huawei’s lost smartphone and other telecom sales, as long as foreign buyers are not deterred by security concerns.
According to a port spokesman, Peng Pai, the Tianjin port’s fleet of 88 autonomous battery-powered trucks are charged by wind turbines. Peng stated that “It’s much safer, and it uses clean energy.” In a control room on the third floor, with large windows that overlook the port, a dozen operators sit in front of displays with up to six screens displaying video feeds of computer-controlled cranes lifting cargo boxes onto or off ships. Each operator is able to monitor up to six cranes at once, unlike a traditional operator who only controls one ship.
Yang Jiemin, a vice president of Tianjin Port Group, said “People had to work high up in cranes. Now, our operators can sit in an office and monitor equipment remotely.” According to Huawei’s Yue, operators take control of a crane or truck if sensors indicate a problem. He said the port’s goal is to reduce the need for human intervention to 0.1%, or one container out of 1,000, while computers handle the rest of the cargo from start to finish.
The high-speed network enables a crane or truck to respond to a command in 1/100th of a second, even when the ships are 500 meters (one-third of a mile) away from the control room, as per Liu Xiwang, the manager of the port’s information department. Liu said “You can’t feel the delay.”
When asked about the sources of critical components that might be affected by US sanctions, the Huawei executive, Yue, was hesitant to provide a direct answer. He stated “I really don’t know the answer to your question.” He compared it to purchasing a cup of coffee, “I don’t know who supplies the cup, the coffee beans and the water.”