Huawei pivots to renewable energy as smartphones slump

Chinese telecommunications hardware provider Huawei Technologies has turned to solar power and energy storage projects as its smartphone business struggles under U.S. sanctions, but the company’s ability to return to growth remains uncertain.

“Digitalization and carbon neutrality are two of the world’s hottest topics,” Huawei deputy chairman Guo Ping said Tuesday in an online speech at the MWC Barcelona mobile tech expo, stressing the need to consider a “new dimension” of carbon reduction.

Huawei’s booth at the expo introduces network technology that leads to a reduced carbon footprint. Richard Jin, president of the company’s optical business product line, said using its system would contribute to the decarbonization of the industry.

Huawei has already made headway in markets such as the Middle East. The company won a bid from the Dubai government to build a data center that uses solar power. Slated to go online in May, the facility in the United Arab Emirates will be one of the region’s largest low-carbon data centers, according to Chinese media.

Huawei also received an order in Saudi Arabia last October for an energy storage project touted as the world’s largest. This is part of the Saudi Arabian government’s plans for a zero-emissions city on the Red Sea coast powered entirely by renewable energy.

With a string of large projects in the pipeline, Huawei will bulk up in such areas as R&D. In Shenzhen, where Huawei is headquartered, the company plans to spend RMB 4 billion (USD 630 million) on a new R&D center and a main office for its digital power business, focused on improving the efficiency of telecom carriers and networks. Technology to monitor energy consumption online will be among the areas of research.

Huawei already has expertise in the sector, controlling the industry’s largest share of solar inverters, a core component of solar power modules. It also holds numerous 5G patents. By combining energy and telecom technologies, Huawei sees business opportunities to support the shift toward decarbonization.

The overhaul of its business model is spurred by a hit to its smartphone business resulting from U.S. sanctions. Huawei’s ability to secure semiconductors has been limited since Washington strengthened export restrictions in September 2020. The company had led the industry in smartphone shipments before the tightening of restrictions but has fallen out of the top five since 2021.

In shifting from smartphones, Huawei has turned its attention from consumer products to electric cars. But the business is likely to take quite some time to turn a profit, according to an auto executive. This has led to a focus on the corporate sector, including the low-carbon business, as a new source of earnings.

Consumer products previously accounted for the majority of Huawei’s sales. It expects overall revenue to have dropped roughly 30% on the year to around RMB 634 billion in 2021. Considering that a pivot to corporate business is not expected to immediately lead to rapid growth, the company’s challenges are likely to continue.

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