Bloomberg claims to have come across an internal memo penned down by Huawei’s CEO Ren Zhengfei that talks about the company’s future plans. The media outlet says that the memo has been verified by a company spokeswoman.
The beleaguered tech giant's founder has laid out a three to five-year plan that will transform the Chinese manufacturer into an "invincible iron army" to take on the challenges thrown by the U.S. government. Zhengfei warned that times are going to be tough for the consumer business, possibly hinting that some units might be offloaded as the business is restructured to survive in the face of U.S. threats.
However, further details were not provided, although it’s almost a given that units not considered profitable or necessary for long term growth will be removed. Apparently, the company has also started laying off U.S.-based employees and it might also do the same in other regions to cut costs.
It’s rather interesting to see Huawei's CEO compare the current situation to war, as previously Zhengfei was trying to downplay the effects of the ban. The memo terms these testing times as harsh and difficult, signaling that the Chinese conglomerate has started to feel its impact. The memo further says that two bullets fired at the consumer business unit have hit the oil tank. It’s a little hard to make out what this exactly means, but it’s safe to assume to the ban has proven to be catastrophic for the business wing of Huawei.
Back in May, Huawei was put on an entity list by the Trump administration, which prompted many of the key supply chain partners of the company, including Google, to severe business ties with it. Although the consumer business, which includes smartphones and laptops, continued to grow in the second quarter of the year, the pace slowed down compared to the first quarter.
Previously, there was hope that the U.S. and China will make up, but talks have kind of stalled, with President Donald Trump saying outright on Friday that the country will not do business with Huawei. At the same time, he hinted that the administration is open to making a deal.
On the same day, Huawei launched its own operating system called the Harmony OS, which is basically aimed at the Internet of Things devices. However, the company’s future smartphones might come preinstalled with it too if Google restricts access to Android.
Huawei's CEO seems much more confident about his company’s 5G business, highlighting that the company has an edge over the U.S. in the next generation of telecommunication technologies. This, he believes, might affect the country’s progress in the artificial intelligence sector. The U.S. has been actively trying to force its allies to not use Huawei’s networking gear, with some countries giving in, and other’s sticking to the company’s 5G equipment.
The Chinese company is said to have a lead over its rivals Nokia and Ericsson when it comes to the 5G technology. Its equipment is also cheaper, which makes it the top choice for many countries. Moreover, for many European countries, it’s almost impossible to proceed with 5G plans without Huawei as a lot of their legacy hardware already comes from the company.
Right now, all eyes are on the Harmony OS, as unless it provides an experience comparable to Android, the consumer business can be in serious trouble. The real challenge for the company is to build an app ecosystem and get developers on board and if the past is any indication, that is no easy feat.