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EXCLUSIVE Huawei founder urges shift to software to counter U.S. sanctions

Huawei founder Ren Zhengfei attends a panel discussion at the company’s headquarters in Shenzhen, Guangdong Province, China on June 17, 2019. REUTERS / Aly Song

Chinese tech giant Huawei Technologies (HWT.UL) founder Ren Zhengfei has urged the company’s employees to “lead the world” when it comes to growth beyond US-sanctioned hardware operations.

Reuters’ internal memo is the clearest evidence yet of the company’s direction as it responds to the immense pressure the sanctions have put on its core cellphone business.

Ren said in the memo that the company is focusing on software because future developments in this area are fundamentally “beyond the control of the US and we will have more independence and autonomy”.

Since it will be difficult for Huawei to produce advanced hardware in the short term, it should focus on building software ecosystems such as: B. the HarmonyOS operating system, the cloud AI system Mindspore and other IT products.

Former US President Donald Trump put Huawei on an export blacklist in 2019 and denied it access to key technologies from the US, which affected its ability to develop its own chips and source components from external vendors.

US President Joe Biden’s administration has given no indication that it will lift Trump’s sanctions.

The blacklist also blocked Google (TogetL.O) From providing technical support for new Huawei phone models to accessing Google Mobile Services, the suite of developer services on which most Android apps are based.

Huawei’s 2020 annual report didn’t break down how much of its 891.4 billion yuan ($ 138.70 billion) in revenue came from its software.

OPEN SOURCE APPROACH

Ren’s note also states that the software push would depend on finding the right business model and that the company should take an open source approach, encouraging employees to take in nutrients through open source communities .

He said the company’s Welink business communications platform relied on traditional software licenses that were unsuitable for cloud computing and inferior to a competing product from tech giant Alibaba (9988.HK).

Given the difficulty of working in the United States, Ren said the company should strengthen its position domestically and build its territory to potentially exclude the United States.

“As soon as we dominate Europe, the Asia-Pacific region and Africa, the US cannot enter our territory if US standards do not meet ours and we cannot enter the US,” it said.

Ren’s note confirms a direction emerging from previous announcements by the company suggesting a move away from the handset’s hardware.

Rotating chairman Eric Xu said in April the company will invest more than $ 1 billion in its intelligent driving business this year.

The company is also expanding its smart car partnership with the state-run Chongqing Changan Automobile Co Ltd to include the design and development of semiconductors for automatic use, sources told Reuters earlier this month. Continue reading

Aside from the pressure of sanctions, Huawei is known for its strenuous work culture. The notice recommended that software teams should hire psychology professionals to help young recruits who may find the company emotionally challenging.

“Now some young people have high IQs, but their EQ may be low, and their mentality is not mature, and it is easy for them to get sick,” said Ren.

($ 1 = 6.4270 Chinese yuan renminbi)

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