Huawei hit hard by coronavirus in China, new criminal charges in U.S.

Posted:
in iPhone
There's lots of bad news piling up for Huawei, the firm often considered to be Android's best hope of challenging Apple's leadership in smartphone design and business competency.


Huawei faces contagion interruptions at home and conspiracy charges abroad


A recent report detailed why Huawei will be hardest hit by the coronavirus interruptions in China, while the U.S. Department of Justice just filed a lengthy new indictment involving 16 criminal counts against the company including racketeering and conspiracy to steal IP.

Huawei's 60% exposure in China

A report yesterday by Ethan Qi of Counterpoint Research predicted that first quarter smartphone shipments in China would drop by 20%, noting that Huawei would be among the worst impacted by coronavirus interruptions because it relies on domestic sales in China for most of its shipments.

Huawei also has additional exposure from its reliance on retail kiosks to drive high volume sales of its frequently discounted Androids. Closures of retail stores and transportation in China will affect "offline" phone purchases the most, with less impact on online sales.

Counterpoint Research Analyst Flora Tang explained that "Huawei group is likely to suffer as China has accounted for over 60% of its total smartphones sales. OPPO and Vivo will also be impacted because of their greater reliance on offline sales channels. The influence on sales of Xiaomi, OnePlus and Realme will likely be less severe as they are more online-centric and overseas-focused."

Counterpoint estimated that Apple could see a loss of "about one million units of iPhones" in the quarter related to the shutdown of its most of its retail stores this week. Unlike Huawei, Apple currently only relies on Greater China for about an estimated 17% of its global revenues. Additionally, Apple has maintained sales through its online retail store in China.

At the same time, Counterpoint also stated that Apple's "new product development plans will also be affected as engineers from the USA and Taiwan cannot travel to China," and noted that the expected late March launch of the "iPhone SE2" is likely to "have troubles in ramping up volume due to the insufficient labour force in Foxconn's Zhengzhou factory."

Apple's production and development efforts in China will certainly be affected, but it has months to handle its most serious issues before its next cycle of "iPhone 12" models must begin production. Android makers, and in particular Huawei, are running into similar issues but do not have the luxury of any extra time to get up to speed.

"We think the virus will be contained in March," stated Tom Kang, a Research Director at Counterpoint. "However, it may take two more months for commerce activities in China to fully go back to normal." The firm also noted that the expected drop in sales in the current Q1 "is likely to generate a surge in channel inventories and further influence shipments and new products launches through Q2."

This quarter, Huawei and a variety of other Android makers in China expected to launch major phone models in China, plans that will have be rescheduled and adjusted to account for the current shutdowns affecting production, shipping and sales. Apple's peak sales of the iPhone 11 cycle have already occurred, while Huawei and other Android makers must maintain huge sales year-round just to continue their current, minimally profitable operations.

Huawei also canceled its annual developer conference that was planned for mid February and slated to occur at its headquarters located in Shenzen, 700 miles south of the outbreak's epicenter in Wuhan. It expects to shift the event to the end of March.

Many market research groups have consistently pointed only to unit sales and market share as the primary barometers of market health among handset makers in the industry, while ignoring the market value of those shipments, or the profitability of individual phone makers. This has lead to a rollercoaster of reporting that once venerated Xiaomi, then Oppo, and most recently Huawei for their volume shipments without considering whether those unit volumes were sustainable, or profitable, or even attracting satisfied and loyal buyers that were likely to remain customers in the future.

However, Counterpoint has rather uniquely highlighted on a regular basis, as it did in December, that Apple leads the global handset industry in profit share, despite being outsold un unit volumes by Samsung and Huawei.


Counterpoint has uniquely called attention to the difference between Apple's valuable premium share of the market and unit volumes of commodity.


Karn Chauhan wrote, "Apple dominates the global handset market by capturing 66% of industry profits and 32% of the overall handset revenue. The loyal premium user base in the major markets like the USA, EU and Japan is one of the reasons that Apple can still operate at a profit level that its competitors can only wish for."

That report also noted "it is becoming a challenge for Chinese brands to increase their smartphone ASPs and margins due to a combination of longer consumer holding periods and Apple lowering pricing on some key SKUs, which has limited the headroom that Chinese vendors had used to increase their ASPs."

Dismal hope for Huawei in the U.S.

While dealing with coronavirus interruptions at home, Huawei is also now facing a new set of criminal charges in the U.S. Writing for TechCrunch, Danny Crichton reported that the U.S. Department of Justice and the FBI have filed a new 58 page indictment of the the company and its U.S. subsidiaries that details 16 new charges, including conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO) statute.

The charges allege that Huawei and its various affiliates signed confidential agreements with American firms to access trade secrets and intellectual property that were subsequently fraudulently used to advance Huawei's own business.

An announcement of the complaint by the DOJ detailed the "company's alleged long-running practice of using fraud and deception to misappropriate sophisticated technology from U.S. counterparts."

US unseals superseding indictment against Huawei, adding a charge of conspiracy to steal trade secrets. Government alleges Huawei stole "trade secret information and copyrighted works, such as source code and user manuals for internet routers," + antenna and robot testing tech. https://t.co/p7a0WO9Mu4

-- Eamon Javers (@EamonJavers)


The complaint specifically claims that Huawei "used proxies such as professors working at research institutions or third party companies, purporting not to be working on behalf of the IP defendants, to gain access to victim companies non public intellectual property."

The charges detail that, "as part of the scheme, Huawei allegedly launched a policy instituting a bonus program to reward employees who obtained confidential information from competitors. The policy made clear that employees who provided valuable information were to be financially rewarded."

It also noted that "to prevent civil and criminal liability, as well as reputational harm, when confronted with evidence of the wrongdoing the IP defendants publicly blamed the wrongdoing on purportedly rogue low-level employees of Huawei and its subsidiaries and affiliates."

Huawei is also included among the defendants charged with lying to federal investigators and obstructing the investigation. The charges are an expansion of the fraud charges facing Huawei's CFO Meng Wanzhou, who was detained in Canada and placed under house arrest related to accusations that the company violated international sanctions against Iran and North Korea.

Wow. The new DOJ indictment alleges that Huawei "assisted the Government of Iran by installing surveillance equipment to monitor, identify, and detain protesters during the anti-government demonstrations of 2009." pic.twitter.com/Vn6oV8pUm2

-- Caroline Orr (@RVAwonk)


Huawei has sought to present itself as the victim of protectionism in the U.S., claiming it has done nothing wrong and that the latest charges included a "contrived repackaging of a handful of civil allegations that are almost 20 years old."

However, Huawei has also repeatedly advanced stores to the media that were absolutely false before. When placed under the Entity List that barred Google from doing business with the company, Huawei claimed that it had a full mobile operating system and development platform that was ready to deploy immediately in January 2018, but that it preferred to continue doing business with Google. Both were clearly lies. Two years later Huawei is still struggling along with the same old version of Android that can't run Google services, and not by choice.

Journalists bent over backwards to reinterpret the claims and assurances flowing out of Huawei to find some semblance of truth, constantly struggling to position Huawei as misunderstood and confused rather than dishonest.

Huawei has also intimated that it will suffer very little impact from coronavirus and suggested that its factories are already in full operation, another story that doesn't align with known facts. Huawei's lack of hesitancy in making incredible claims and in insisting that it could prove, for example, that its products can not be influenced by the Chinese state (it can't possibly prove this) make it difficult to buy anything the company says.

Android fans including even many major journalists have firmly aligned themselves with Huawei out of fealty to Google, largely because the company appears to be the last best hope for Android offering any meaningful challenge to Apple and its iOS platform.
tmaylolliverwatto_cobra
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Comments

  • Reply 1 of 90
    avon b7avon b7 Posts: 7,590member
    Huawei has more likelihood of being affected simply because its share of the pie is huge.

    The reality is that everyone will be affected to the same degree. A closed factory isn't outputting to anybody

    Apple is affected to the same degree in spite if its blowout quarter having taken place already. That point offers no consolation. It might even be worse for Apple because of its stock market situation and its reliance on iPhone as a revenue driver.

    Everybody is suffering. That's logical.

    "Huawei also has additional exposure from its reliance on retail kiosks to drive high volume sales of its frequently discounted Androids."

    Huawei doesn't have a reliance on retail kiosks. Someone didn't do their homework here. One of Huawei's main volume drivers is HONOR. It is an e-brand and has been since its creation. Most of its sales are customer direct - online. Huawei has recently (last year) also increased its online presence. The upshot is that you will find Huawei products in just about every retail option be it 'on' or 'off' line.

    As far as U.S accusations are concerned, they are just that, accusations, and we recently reached a tipping point where it is far better to discount them by default until the facts are on the table. It is literally scrambling to find something, anything, to derail Huawei. Protectionism, pure and simple and recent revelations haven't helped its case. From the Pentagon challenging the Commerce department over further Huawei restrictions, to accusations that the U.S has 'proof' of Huawei backdoors but simply never bothered to reveal them when asked by allies and denying, just months ago, that a 'smoking gun' was even necessary! What a sham!

    So we have wiki leaks, Snowden, Shot Giant, PRISM and the icing on the cake: Crypto AG.

    Everyone should trust the U.S! And those sanctions! The ones the U.S unilaterally imposes on nations as if they were U.N sanctions.

    All that with America's number one national security threat sitting right there in the White House.

    In short. Huawei will be hit harder simply as a percentage because it has a larger slice of the pie. Everyone will be hit hard though.

    Accusations, when they originate from the current administration, are literally worthless even at face value. 

    Or 'complete and utter nonsense'  for some of them, and those are Huawei's own words:

    https://www.bbc.com/news/technology-51506222



    edited February 2020 MacPromuthuk_vanalingam
  • Reply 2 of 90
    BeatsBeats Posts: 3,073member
    Huawei stealing secrets to copy American companies (Apple)?

    Shocker.
    dedgeckolkrupplolliverjony0watto_cobra
  • Reply 3 of 90
    mwhitemwhite Posts: 287member
    avon b7 said:
    Huawei has more likelihood of being affected simply because its share of the pie is huge.

    The reality is that everyone will be affected to the same degree. A closed factory isn't outputting to anybody

    Apple is affected to the same degree in spite if its blowout quarter having taken place already. That point offers no consolation. It might even be worse for Apple because of it stock market situation and its reliance on iPhone as a revenue driver.

    Everybody is suffering. That's logical.

    "Huawei also has additional exposure from its reliance on retail kiosks to drive high volume sales of its frequently discounted Androids."

    Huawei doesn't have a reliance on retail kiosks. Someone didn't do their homework here. One of Huawei's main volume drivers is HONOR. It is an e-brand and has been since its creation. Most of its sales are customer direct - online. Huawei has recently (last year) also increased its online presence. The upshot is that you will find Huawei products in just about every retail option be it 'on' or 'off' line.

    As far as U.S accusations are concerned, they are just that, accusations, and we recently reached a tipping point where it is far better to discount them by default until the facts are on the table. It is literally scrambling to find something, anything, to derail Huawei. Protectionism, pure and simple and recent revelations haven't helped its case. From the Pentagon challenging the Commerce department over further Huawei restrictions, to accusations that the U.S has 'proof' of Huawei backdoors but simply never bothered to reveal them when asked by allies and denying, just months ago, that a 'smoking gun' was even necessary! What a sham!

    So we have wiki leaks, Snowden, Shot Giant, PRISM and the icing on the cake: Crypto AG.

    Everyone should trust the U.S. And those sanctions! The ones the U.S unilaterally imposes on nations as if they were U.N sanctions.

    All that with America's number one national security threat sitting right there in the White House.

    In short. Huawei will be hit harder simply as a percentage because it has a larger slice of the pie. Everyone will be hit hard though.

    Accusations, when they originate from the current administration, are literally worthless even at face value. 

    Or 'complete and utter nonsense'  for some.of them and in Huawei's own words:

    https://www.bbc.com/news/technology-51506222




    Get use to it 4 more years is coming Trump 2020
    2old4funmacseekerlkruppwatto_cobra
  • Reply 4 of 90
    avon b7avon b7 Posts: 7,590member
    Beats said:
    Huawei stealing secrets to copy American companies (Apple)?

    Shocker.
    Even more amazing is their ability to bring fully developed products and technologies to market long before anyone else, a massive patent pool (to which Apple pays millions) AND has consistently invested huge amounts in R&D. Billions.
    edited February 2020 muthuk_vanalingamBeats
  • Reply 5 of 90

    More than Corona virus, I guess Huawei is hit much harder by Google's refusal to provide Google Play Services license to them. This puts them at a significant disadvantage in international markets where selling newer models without Google Play Services has become near impossible. I am not sure whether this is a right move on the part of Google though.

    My gut feeling is that - all of Chinese OEMs together (Huawei/BBK/Xiaomi) most likely will find a solution out of this mess in another couple of years. Agreed, It is a very difficult task to pull off successfully. But when pushed hard against a wall, they are going to give everything at their disposal to succeed. Then Google's presence in mobiles sold in most of the world (except US and few of its allies) would become much more diminished. My thinking is that Google is continuing to shoot themselves in the foot when it comes to dealing with Huawei (and in turn China) and it is going to backfire on them spectacularly in the long run.

    edited February 2020
  • Reply 6 of 90
    Good.

    Their karma is catching up with them. Can't wait to see how the CFO extradition turns out.
    Beatstmaydedgeckowatto_cobrastantheman
  • Reply 7 of 90
    BeatsBeats Posts: 3,073member

    More than Corona virus, I guess Huawei is hit much harder by Google's refusal to provide Google Play Services license to them. This puts them at a significant disadvantage in international markets where selling newer models without Google Play Services has become near impossible. I am not sure whether this is a right move on the part of Google though.

    My gut feeling is that - all of Chinese OEMs together (Huawei/BBK/Xiaomi) most likely will find a solution out of this mess in another couple of years. Agreed, It is a very difficult task to pull off successfully. But when pushed hard against a wall, they are going to give everything at their disposal to succeed. Then Google's presence in mobiles sold in most of the world (except US and few of its allies) would become much more diminished. My thinking is that Google is continuing to shoot themselves in the foot when it comes to dealing with Huawei (and in turn China) and it is going to backfire on them spectacularly in the long run.


    Let all the knockoffs eat each other. You can't be more of a scumbag then stealing a companies inventions and selling them as your own. If Apple brings a new cheaper iPhone SE onto the market, expect these companies to hurt further.
    lolliverwatto_cobra
  • Reply 8 of 90
    avon b7avon b7 Posts: 7,590member

    More than Corona virus, I guess Huawei is hit much harder by Google's refusal to provide Google Play Services license to them. This puts them at a significant disadvantage in international markets where selling newer models without Google Play Services has become near impossible. I am not sure whether this is a right move on the part of Google though.

    My gut feeling is that - all of Chinese OEMs together (Huawei/BBK/Xiaomi) most likely will find a solution out of this mess in another couple of years. Agreed, It is a very difficult task to pull off successfully. But when pushed hard against a wall, they are going to give everything at their disposal to succeed. Then Google's presence in mobiles sold in most of the world (except US and few of its allies) would become much more diminished. My thinking is that Google is continuing to shoot themselves in the foot when it comes to dealing with Huawei (and in turn China) and it is going to backfire on them spectacularly in the long run.

    To be fair to Google, it hasn't restricted access to GMS voluntarily. It was imposed by the government. Google has lobbied very hard (along with Microsoft) to get the government to change tack. Ironically it has also used national security as a reason but the opposite to the government stance.

    Cutting U.S technological ties to Huawei will strangle the future of homegrown technologies and accelerate advances by competitors. This is why the Pentagon and DoD pushed back against the Commerce department the other day. For Google it is terrifying for a number of reasons. The impact on Huawei highlights the GMS 'monopoly' accusations while also forcing a huge partner to become a direct competitor - and in western markets. HMS is a huge potential threat and there are reports of all the top Chinese vendors pulling together against the Play Store.

    That is a huge loss for Google in Huawei GMS licences, without mentioning the impact on Google Search which could be utterly devastating.

    The crazy thing is that Trump is forcing this damage on U.S interests and seems blind to the consequences of his actions.
    muthuk_vanalingamDan_Dilger
  • Reply 9 of 90
    avon b7 said:
    Huawei has more likelihood of being affected simply because its share of the pie is huge.
    The reality is that everyone will be affected to the same degree. A closed factory isn't outputting to anybody. 
    Thanks for the official comments straight from Huawei, Avon! You always bring out the talking points without any distractions of personal opinion.

    Yet the article outlines why this isn't just about "a closed factory." Huawei is specifically dealing with delayed launches, its own delayed dev conference, the cancelation of MWC (not just as a handset vendor, but the leading cheap 5G network vendor), and the fact that Huawei doesn't make money, because its just following orders of the PRC to promote national achievement. The fact that Huawei has an online brand doesn't negate what Counterpoint is reporting: Huawei is much more of a retail store brand than Xiaomi and others. 

    "As far as U.S accusations are concerned, they are just that, accusations" Sorry that's a lie. the first example is clearly Cisco. Huawei straight up stole Cisco's IOS software and admitted it. It's now passing that off as having happened "long ago" because it first occurred in the early 2000s. It has clearly backed a string of IP thefts. Look at its AirPods and everything it does. It's nothing but a rip-off company. 

    Crypto AG isn't evidence of anything other than that every nation is seeking intelligence. To assume that China ISN'T and should be allowed to install its networking gear and devices everywhere is the height of absolute foolishness. China is actively spying on US companies without any doubt. The country has zero respect for IP, somewhat understandably. If you are marching in the Red Revolution and working for its state businesses, of course you should promote Huawei. But don't for one second suggest that China isn't actively spying on the rest of the world or isn't interested. That's just absurd. 

    "
    Huawei will be hit harder simply as a percentage because it has a larger slice of the pie. Everyone will be hit hard though" 

    Except that Huawei only has a big slice of the unit pie. It's making very little profit from all of its shipments. As Samsung's results show, losing some volume when you're already making very little results in a huge crash in profits. Apple lost unit sales last year much more sharply than Samsung but its profitability, and the health of its side businesses, meant that its hit to earnings was much lower. 

    What we do know is that Apple has been wildly successful at competing against larger businesses and handling devastating shocks to its supply chain-like Japan in 2012. iPad 2 buyers didn't even notice an interruption. Huawei, Samsung and others have struggled to turn a profit in the best of conditions, and have had miserable sales in the premium tier. Huawei ships out middle tier knockoff phones and pays influencers to suggest they are just cheaper iPhones.

    Check out the cameras on even high-end Huawei's. They are crap. I spent a week comparing results with a friend who had a fancy P30. Color was bad, exposure was bad, the UI sucks and is complex and ugly. For a company being fed by the PRC military, I'd expect more. 

    But overall, you are totally wrong. Huawei is the worst positioned to deal with interruptions in China because its sales are totally concentrated there. Duh.

    Soli2old4funlolliverjony0watto_cobrastantheman
  • Reply 11 of 90
    tmaytmay Posts: 6,293member
    avon b7 said:
    Beats said:
    Huawei stealing secrets to copy American companies (Apple)?

    Shocker.
    Even more amazing is their ability bring fully developed products and technologies to market long before anyone else, a massive patent pool (to which Apple pays millions) AND has consistently invested huge amounts in R&D.

    Huawei is great at turning out a wide range of products in rapid succession, but given the fact that they are operating at low margins, it's obvious that Apple isn't going to operate the same way. Now that Samsung has released the S20 models, I'm not seeing that Huawei is going to be able to compete on anything but price with them, and given that Apple is a whole different market, I'm not seeing how Huawei will compete with Apple, especially with a second rate version of Android OS.

    https://supchina.com/2020/02/12/the-age-of-cooptation-the-high-cost-of-doing-business-in-xis-china/

    "The cost of doing business in China today is a high one, and it is paid by any and every company that comes looking to tap into its markets or leverage its workforce. Quite simply, you don’t get to do business in China today without doing exactly what the Chinese government wants you to do. Period. No one is immune. No one."


    "How Huawei caught up to Apple’s FaceID

    In the spring of 2018, I flew to Shenzhen to spend some time with an old friend, Ken Hu (胡厚崑 Hú Hòukūn), the vice chairman of the Board of Directors at Huawei. I then went on to have lunch with Madame Chén Lífāng 陈黎芳, Huawei’s senior vice president, board member, and the head of the company’s government affairs office. (I have known Hu and Chen a long time and they were willing to take a friendly meeting to catch up on things.) I wanted to meet with Ken and Madame Chen to confirm a rumor I had heard in China technology circles. 

    The background for this story is that Apple is very good at supply chain innovation and helping suppliers build out manufacturing processes. Because Apple works with so many suppliers, there tends to be a significant amount of leakage in the supply chain, as Apple supply chain partners seek to leverage their Apple-acquired knowledge to make money by supplying Apple’s competitors like Huawei, Oppo, and Vivo. Thus, many competitors follow Apple around the supply chain, hoping to take advantage of the processes these suppliers have learned from working with Apple. 

    Huawei is often first in line for taking advantage of what these suppliers have learned from Apple. Sometime around 2015, there were rumors in the Chinese smartphone manufacturing community of something called FaceID (leading up to the launch of the iPhone X). There were also rumors of a hardware module, which would make FaceID possible. The rumors were that this would be a significant leap in innovation for Apple, and it would likely create a significant gap between Apple and its competitors. There were also rumors that Huawei was attempting to entice Chinese suppliers to reveal some of the secrets behind the new hardware module. This is the story I wanted Ken Hu and Madame Chen to confirm for me.

    Huawei realized it would be a serious setback for the company if it didn’t have something similar to Apple’s FaceID, and Huawei went to the government for help. Initially, Huawei hoped the government would put some heat on Apple and force the suppliers to loosen up a little bit. Surprisingly, the government said the following (I am paraphrasing here, based on my conversation with Madame Chen): 

    Government: Forget about Apple suppliers on this issue. 

    Huawei: We can’t ignore this. It will be a serious competitive advantage for Apple iPhones if we don’t have something comparable. 

    Government: We did not say forget about FaceID, just forget about following Apple on hardware. What if we gave you access to a database of 1.4 billion faces and you used that database to develop an AI algorithm to recognize faces? Could you develop an AI solution rather than a hardware solution?

    And that’s what Huawei did. The Chinese Government, which has probably been more aggressive (and intrusive) in collecting data through facial recognition than any government in the world, was offering to turn over a database of faces to a private company to build an AI algorithm for facial recognition. 

    Think about this: The Chinese Government was offering to make all of its facial recognition data available to a private company to help this company compete with an international, publicly-traded competitor. This type of coordination between the Chinese Government and the private sector would have been unthinkable six years ago. But what did Huawei owe the Chinese government as a result? What was the quid pro quo here? Very likely: data. And what does this case suggest about other companies that have significant manufacturing and sales operations there?

    The Bottom Line

    The Huawei case is just one example of the close collaboration between Xi’s government and the private sector — especially the high-tech sector. There are many other examples, including foreign companies. This is the cost of doing business in China in Xi’s Age of Cooptation. What does this mean for foreign companies doing business in China today? Galloway predicted that we are going to hear a lot more about this issue in the coming year. He might be right. The bottom line is this: if you are not helping China develop in the areas it wants to develop, you are no longer welcome. Whether it is data centers, 5G technology, or infrastructure that will help with the Belt and Road Initiative, there has to be a benefit for China. This is the cost of doing business in China today."

    Huawei is the beneficiary of its Authoritarian Government ties as a state owned enterprise.


    Needless to state, I am in agreement with Nancy Pelosi, and other U.S. participants at the Munich Security Conference:


    "Live at #MSC2020: US House Speaker Nancy Pelosi says allowing Huawei to build 5G networks is allowing "the most insidious form of aggression" from an autocracy. She said this with European leaders (who are discussing to what degree to allow Huawei work on 5G) in attendance."

    "Fu Ying, female member of China's National People's Congress, stands up and questions US House Speaker Nancy Pelosi's stance on Huawei, asking why she considers Huawei such a threat. Pelosi responds with a lengthy answer involving treatment of Uighurs, Tibetans, HK, etc. #MSC2020"

    Soon after Pelosi shot back at Fu Ying's Huawei question, a@dwnews reporter stood up and continued the attack, asking the NPC member why journalists from DW and other European orgs aren't allowed to freely report in her country and why China blocks Twitter and Facebook #MSC2020



    edited February 2020 Dan_DilgerGG1watto_cobrastantheman
  • Reply 12 of 90
    SoliSoli Posts: 10,035member
    Huawei's official response:
    avon b7 said:
    Huawei has more likelihood of being affected simply because its share of the pie is huge.

    The reality is that everyone will be affected to the same degree. A closed factory isn't outputting to anybody

    Apple is affected to the same degree in spite if its blowout quarter having taken place already. That point offers no consolation. It might even be worse for Apple because of it stock market situation and its reliance on iPhone as a revenue driver.

    Everybody is suffering. That's logical.

    "Huawei also has additional exposure from its reliance on retail kiosks to drive high volume sales of its frequently discounted Androids."

    Huawei doesn't have a reliance on retail kiosks. Someone didn't do their homework here. One of Huawei's main volume drivers is HONOR. It is an e-brand and has been since its creation. Most of its sales are customer direct - online. Huawei has recently (last year) also increased its online presence. The upshot is that you will find Huawei products in just about every retail option be it 'on' or 'off' line.

    As far as U.S accusations are concerned, they are just that, accusations, and we recently reached a tipping point where it is far better to discount them by default until the facts are on the table. It is literally scrambling to find something, anything, to derail Huawei. Protectionism, pure and simple and recent revelations haven't helped its case. From the Pentagon challenging the Commerce department over further Huawei restrictions, to accusations that the U.S has 'proof' of Huawei backdoors but simply never bothered to reveal them when asked by allies and denying, just months ago, that a 'smoking gun' was even necessary! What a sham!

    So we have wiki leaks, Snowden, Shot Giant, PRISM and the icing on the cake: Crypto AG.

    Everyone should trust the U.S! And those sanctions! The ones the U.S unilaterally imposes on nations as if they were U.N sanctions.

    All that with America's number one national security threat sitting right there in the White House.

    In short. Huawei will be hit harder simply as a percentage because it has a larger slice of the pie. Everyone will be hit hard though.

    Accusations, when they originate from the current administration, are literally worthless even at face value. 

    Or 'complete and utter nonsense'  for some of them, and those are Huawei's own words:

    https://www.bbc.com/news/technology-51506222
    edited February 2020 tmayGG1avon b7jcs2305lolliverwatto_cobra
  • Reply 13 of 90
    avon b7avon b7 Posts: 7,590member
    avon b7 said:
    Huawei has more likelihood of being affected simply because its share of the pie is huge.
    The reality is that everyone will be affected to the same degree. A closed factory isn't outputting to anybody. 
    Thanks for the official comments straight from Huawei, Avon! You always bring out the talking points without any distractions of personal opinion.

    Yet the article outlines why this isn't just about "a closed factory." Huawei is specifically dealing with delayed launches, its own delayed dev conference, the cancelation of MWC (not just as a handset vendor, but the leading cheap 5G network vendor), and the fact that Huawei doesn't make money, because its just following orders of the PRC to promote national achievement. The fact that Huawei has an online brand doesn't negate what Counterpoint is reporting: Huawei is much more of a retail store brand than Xiaomi and others. 

    "As far as U.S accusations are concerned, they are just that, accusations" Sorry that's a lie. the first example is clearly Cisco. Huawei straight up stole Cisco's IOS software and admitted it. It's now passing that off as having happened "long ago" because it first occurred in the early 2000s. It has clearly backed a string of IP thefts. Look at its AirPods and everything it does. It's nothing but a rip-off company. 

    Crypto AG isn't evidence of anything other than that every nation is seeking intelligence. To assume that China ISN'T and should be allowed to install its networking gear and devices everywhere is the height of absolute foolishness. China is actively spying on US companies without any doubt. The country has zero respect for IP, somewhat understandably. If you are marching in the Red Revolution and working for its state businesses, of course you should promote Huawei. But don't for one second suggest that China isn't actively spying on the rest of the world or isn't interested. That's just absurd. 

    "Huawei will be hit harder simply as a percentage because it has a larger slice of the pie. Everyone will be hit hard though" 

    Except that Huawei only has a big slice of the unit pie. It's making very little profit from all of its shipments. As Samsung's results show, losing some volume when you're already making very little results in a huge crash in profits. Apple lost unit sales last year much more sharply than Samsung but its profitability, and the health of its side businesses, meant that its hit to earnings was much lower. 

    What we do know is that Apple has been wildly successful at competing against larger businesses and handling devastating shocks to its supply chain-like Japan in 2012. iPad 2 buyers didn't even notice an interruption. Huawei, Samsung and others have struggled to turn a profit in the best of conditions, and have had miserable sales in the premium tier. Huawei ships out middle tier knockoff phones and pays influencers to suggest they are just cheaper iPhones.

    Check out the cameras on even high-end Huawei's. They are crap. I spent a week comparing results with a friend who had a fancy P30. Color was bad, exposure was bad, the UI sucks and is complex and ugly. For a company being fed by the PRC military, I'd expect more. 

    But overall, you are totally wrong. Huawei is the worst positioned to deal with interruptions in China because its sales are totally concentrated there. Duh.

    Flaying about pretty wildly there.

    Try saying Huawei are crap just a little louder. You have the entire industry disputing what you think. Yeah, an opinion. Fair enough but the reality is out there and your opinion is in the minority. In fact it is worse than that because at the time the P30 series was launched, iPhones simply couldn't take the same photos because they didn't even have the necessary hardware. That's not an opinion. It's a fact. 

    You realise too, that even on the software, Huawei has had its full Pro Mode for years. Stock option. Apple never even gave you that option in the past. Ugly? Definitely not! 

    As I said, Huawei will be hit hard as a percentage because it has a larger slice of the pie but where its sales are isn't really the question when most phones are manufactured there. Everyone gets hit the same independently of where they get sold.

    Very little profit? How much? When you can invest billions in R&D and still have billions left over, you have more than enough in my book and Huawei does far, far more with it than Apple. Apple has literally sat on most of its cash and although it wasn't on a Caribbean Island, it looks like it has been on others!

    Huawei is not China. China is not Huawei.


    edited February 2020
  • Reply 14 of 90
    I didn’t buy into to Samsung being harmed by the corona virus as munch as other Android manufacturers, but I absolutely do with China cell phone manufacturers and Huawei in particular.

    The only pushback I’ll offer is 
    Huawei is diversified, and a key player in the 5G global rollout.  So, while they’ll take a hit, it won’t be fatal, and they’ll bounce back.  The weaker Android China manufacturers are in trouble (not the ones listed) I’d be surprised if there isn’t consolation.

    I’m very concerned about state sponsored IP by China, but I need evidence...  

    I do know it’s occurring, but the US stance against Huawei seems more political than evidence based.


    muthuk_vanalingam
  • Reply 15 of 90
    avon b7 said:
    Huawei has more likelihood of being affected simply because its share of the pie is huge.
    The reality is that everyone will be affected to the same degree. A closed factory isn't outputting to anybody. 
    Check out the cameras on even high-end Huawei's. They are crap. I spent a week comparing results with a friend who had a fancy P30. Color was bad, exposure was bad, the UI sucks and is complex and ugly. For a company being fed by the PRC military, I'd expect more. 

    Seriously??? https://www.anandtech.com/show/14165/the-huawei-p30-p30-pro-reviews-photography-enhanced/8.
  • Reply 16 of 90
    avon b7 said:

    Huawei is not China. China is not Huawei.

    That's not really true is it? 

    But addressing your other comments: totally agree that the Trump admin screwed Google to blunt Huawei. But totally have to refute the idea that profits won't matter in determining who can pay to line up the scarce components and production they need. 

    Apple not only has the money to pay for scarce and expensive parts and production capacity, but can also remain profitable while building "smaller numbers" (33.8M last Q2, IDC estimated) of more valuable devices at an ASP of around $800. Huawei is mostly selling $200 handsets in fantastic volumes (58.7M last Q2). How much can it afford to pay to get those devices built in current constrained conditions when it was barely making a profit producing them in prime, contention free settings? This is pretty basic logic we're dealing with.
    edited February 2020 tmaylolliverwatto_cobra
  • Reply 17 of 90
    tmaytmay Posts: 6,293member
    avon b7 said:
    Huawei has more likelihood of being affected simply because its share of the pie is huge.
    The reality is that everyone will be affected to the same degree. A closed factory isn't outputting to anybody. 
    Check out the cameras on even high-end Huawei's. They are crap. I spent a week comparing results with a friend who had a fancy P30. Color was bad, exposure was bad, the UI sucks and is complex and ugly. For a company being fed by the PRC military, I'd expect more. 

    Seriously??? https://www.anandtech.com/show/14165/the-huawei-p30-p30-pro-reviews-photography-enhanced/8.
    Actually, most reviewers consider Huawei and Samsung color to be inferior to Pixel and Apple, and of course, ease of use is much better with Apple and Pixel, but of course, you are entitled to your opinion.

    Consider looking at more reviews.

    Not everything is about low light performance.
    edited February 2020 pscooter63roundaboutnowlolliverwatto_cobra
  • Reply 18 of 90
    dewmedewme Posts: 5,312member
    The reality is that the US will never allow a non-US company to establish communication infrastructure in the US system, especially one that is under the aegis of the only country in the world that remotely justifies the massive military expenditures that have been laid out in a post Cold War world to continue. The US government doesn’t want China or anybody else tapping into its global communication networks. It needs to reserve that right for itself. 
    avon b7GG1lkruppwatto_cobra
  • Reply 19 of 90
    GeorgeBMacGeorgeBMac Posts: 11,421member
    LOL...  "The Justice Dept Accuses...."
    Is that the same justice department that injected itself into the trial and sentencing of Trump's partner in crime to get him a much reduced sentence -- at Trump's direct orders?   The one who refused to investigate Trump's attempt to rig our November election?   The one headed by Trump sycophant Bill Barr who rewrote the Mueller report before releasing his version to the public then refused to release the real version to public for weeks forcing Mueller to call Bull?
    ...  THAT so called "justice department"?

    The only ones buying that nonsense are the few intimidated by Trump's threats and America's right wing zealots.
    The rest go by the facts.

    When asked why Trump's chest thumping hasn't harmed their business Huawei responded that "Our customers know us" -- and obviously know who is lying.

    But, America's right wing zealots will continue to support Trump because, to them, if you tell a lie often enough and loud enough (and then tweet it) the lie magically turns into truth!



    muthuk_vanalingamstantheman
  • Reply 20 of 90
    avon b7avon b7 Posts: 7,590member
    tmay said:
    avon b7 said:
    Beats said:
    Huawei stealing secrets to copy American companies (Apple)?

    Shocker.
    Even more amazing is their ability bring fully developed products and technologies to market long before anyone else, a massive patent pool (to which Apple pays millions) AND has consistently invested huge amounts in R&D.

    Huawei is great at turning out a wide range of products in rapid succession, but given the fact that they are operating at low margins, it's obvious that Apple isn't going to operate the same way. Now that Samsung has released the S20 models, I'm not seeing that Huawei is going to be able to compete on anything but price with them, and given that Apple is a whole different market, I'm not seeing how Huawei will compete with Apple, especially with a second rate version of Android OS.

    https://supchina.com/2020/02/12/the-age-of-cooptation-the-high-cost-of-doing-business-in-xis-china/

    "The cost of doing business in China today is a high one, and it is paid by any and every company that comes looking to tap into its markets or leverage its workforce. Quite simply, you don’t get to do business in China today without doing exactly what the Chinese government wants you to do. Period. No one is immune. No one."


    "How Huawei caught up to Apple’s FaceID

    In the spring of 2018, I flew to Shenzhen to spend some time with an old friend, Ken Hu (胡厚崑 Hú Hòukūn), the vice chairman of the Board of Directors at Huawei. I then went on to have lunch with Madame Chén Lífāng 陈黎芳, Huawei’s senior vice president, board member, and the head of the company’s government affairs office. (I have known Hu and Chen a long time and they were willing to take a friendly meeting to catch up on things.) I wanted to meet with Ken and Madame Chen to confirm a rumor I had heard in China technology circles. 

    The background for this story is that Apple is very good at supply chain innovation and helping suppliers build out manufacturing processes. Because Apple works with so many suppliers, there tends to be a significant amount of leakage in the supply chain, as Apple supply chain partners seek to leverage their Apple-acquired knowledge to make money by supplying Apple’s competitors like Huawei, Oppo, and Vivo. Thus, many competitors follow Apple around the supply chain, hoping to take advantage of the processes these suppliers have learned from working with Apple. 

    Huawei is often first in line for taking advantage of what these suppliers have learned from Apple. Sometime around 2015, there were rumors in the Chinese smartphone manufacturing community of something called FaceID (leading up to the launch of the iPhone X). There were also rumors of a hardware module, which would make FaceID possible. The rumors were that this would be a significant leap in innovation for Apple, and it would likely create a significant gap between Apple and its competitors. There were also rumors that Huawei was attempting to entice Chinese suppliers to reveal some of the secrets behind the new hardware module. This is the story I wanted Ken Hu and Madame Chen to confirm for me.

    Huawei realized it would be a serious setback for the company if it didn’t have something similar to Apple’s FaceID, and Huawei went to the government for help. Initially, Huawei hoped the government would put some heat on Apple and force the suppliers to loosen up a little bit. Surprisingly, the government said the following (I am paraphrasing here, based on my conversation with Madame Chen): 

    Government: Forget about Apple suppliers on this issue. 

    Huawei: We can’t ignore this. It will be a serious competitive advantage for Apple iPhones if we don’t have something comparable. 

    Government: We did not say forget about FaceID, just forget about following Apple on hardware. What if we gave you access to a database of 1.4 billion faces and you used that database to develop an AI algorithm to recognize faces? Could you develop an AI solution rather than a hardware solution?

    And that’s what Huawei did. The Chinese Government, which has probably been more aggressive (and intrusive) in collecting data through facial recognition than any government in the world, was offering to turn over a database of faces to a private company to build an AI algorithm for facial recognition. 

    Think about this: The Chinese Government was offering to make all of its facial recognition data available to a private company to help this company compete with an international, publicly-traded competitor. This type of coordination between the Chinese Government and the private sector would have been unthinkable six years ago. But what did Huawei owe the Chinese government as a result? What was the quid pro quo here? Very likely: data. And what does this case suggest about other companies that have significant manufacturing and sales operations there?

    The Bottom Line

    The Huawei case is just one example of the close collaboration between Xi’s government and the private sector — especially the high-tech sector. There are many other examples, including foreign companies. This is the cost of doing business in China in Xi’s Age of Cooptation. What does this mean for foreign companies doing business in China today? Galloway predicted that we are going to hear a lot more about this issue in the coming year. He might be right. The bottom line is this: if you are not helping China develop in the areas it wants to develop, you are no longer welcome. Whether it is data centers, 5G technology, or infrastructure that will help with the Belt and Road Initiative, there has to be a benefit for China. This is the cost of doing business in China today."

    Huawei is the beneficiary of its Authoritarian Government ties as a state owned enterprise.


    Needless to state, I am in agreement with Nancy Pelosi, and other U.S. participants at the Munich Security Conference:


    "Live at #MSC2020: US House Speaker Nancy Pelosi says allowing Huawei to build 5G networks is allowing "the most insidious form of aggression" from an autocracy. She said this with European leaders (who are discussing to what degree to allow Huawei work on 5G) in attendance."

    "Fu Ying, female member of China's National People's Congress, stands up and questions US House Speaker Nancy Pelosi's stance on Huawei, asking why she considers Huawei such a threat. Pelosi responds with a lengthy answer involving treatment of Uighurs, Tibetans, HK, etc. #MSC2020"

    Soon after Pelosi shot back at Fu Ying's Huawei question, a@dwnews reporter stood up and continued the attack, asking the NPC member why journalists from DW and other European orgs aren't allowed to freely report in her country and why China blocks Twitter and Facebook #MSC2020



    You know, when you pick that apart for the meat - there is none!

    It is always 'rumour', 'likely', 'probably'. Always.

    I will say again. 15 billion dollars isn't just for Ren's Christmas lights. It's R&D. Year after year. Huge amounts of revenues ploughed back into research and development. Next you'll be telling me Apple has a secret 5G lab but Huawei stole it all and brought it to market leaving Apple high and dry.

    The whole FaceID story is just that, a dinnertime story. Just missing the Christmas decoration.

    Now, one thing is for sure, supply chains are sources of information. Nothing new there. It happens everywhere and has always been like that. Yes, stealing too. The U.S stole it's way to success  by ripping off the British and others.

    But let's get real. FaceID was a lab project all the way up to getting the go ahead for full scale manufacturing. I think that's a reasonable assumption. Many of the key parts were very probably produced within the U.S prior to going into mass production. 

    Huawei began with facial recognition on its phones a fair way ahead of Apple. The move to depth sensing as a part of an ongoing strategy was not unique to Apple.

    Yet just weeks after Apple releasing FaceID, Huawei felt it necessary to reveal their own take, which they did. In fact an executive said they could release the product but it would make the phones too expensive, so they held back.

    Do competitors look at what is going on on the other side of the fence? Yep. Do you doubt that Apple is tearing down competitors' products?

    Now, if you think those $15B really do go on the Christmas lights, I suppose that's your problem.


    GeorgeBMac
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