China’s Huawei is looking for ports and factories to rebuild sales

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TIANJIN, China (AP) – As technicians watch on screens in a remote control room, an automated crane moves cargo containers from Japanese freighters to self-driving trucks at one of the busiest ports of China in a scene that the tech giant Huawei sees as its future. after US sanctions destroyed its smartphone brand.

The backbone of the “smart terminal” at Tianjin Port, east of Beijing, is a data network built by Huawei, which is reinventing itself as a supplier for self-driving cars, factories and other industries which he hopes will be less vulnerable to them. Washington Intensification of feud with Beijing over technology and security.

The ruling Communist Party is promoting automation in industries from manufacturing to taxis to help China’s economy grow as the workforce ages and shrinks. Managers say the “smart terminal”, part of Tianjin’s 200 square kilometer port, will allow 200 employees to move goods as much as 800 before.

“We believe this solution in Tianjin is the most advanced in the world,” said Yue Kun, chief technology officer of Huawei’s ports business unit. “We believe it can be applied to other ports.”

Huawei Technologies Ltd., which makes smartphones and is the world’s largest supplier of network equipment to phone carriers, has struggled after then-President Donald Trump banned access to chips of American processors and other technology in a 2019 feud with Beijing over security.

Washington says Huawei is a security risk that could use its access to foreign phone networks to facilitate Chinese espionage, a charge the company denies. The United States and allies, including Japan and Australia, have banned or limited the use of Huawei devices by their phone carriers.

Smartphone sales outside China fell after Huawei lost music, maps and other Google services to Alphabet Inc. that phone buyers expect to be pre-installed. The low-end brand Honor was sold in 2020 in the hope of reviving sales by being separated from the sanctions against its parent company.

Huawei, with a workforce of nearly 200,000, has maintained its status as a leading maker of network equipment because of sales in China and other markets where Washington has had less success in persuading governments to avoid the the company.

“Huawei is already a major player” in data networks with “a wealth of knowledge”, said Paul Budde, an industry analyst.

The company has formed 20 teams, focusing on factories, mines, hospitals, ports, power plants and other industrial customers. The auto division said it has 3,000 employees working on autonomous driving and has invested $21 billion in the technology between 2020 and 2020. Huawei was an early developer of “smart city” networks for traffic control and police surveillance.

“But the big black cloud here is geopolitics,” Budde said. “This will hinder his involvement in foreign markets,” he said. “The issues are not technology, but purely political.”

American pressure on Huawei escalated into an international standoff in 2018 after its chief financial officer, Meng Wanzhou, the founder’s daughter, was arrested in Canada on US charges related to alleged violations of trade sanctions against Iran.

China arrested two Canadians on espionage charges and tried to secure Meng’s release. They were released in September 2021 after Meng was allowed to return to China under a deal with US prosecutors in which she accepted responsibility for misrepresenting Huawei’s dealings with Iran.

Huawei says its new focus is already helping to revive the company’s fortunes.

“In 2020, we have successfully exited the crisis mode,” said Eric Xu, one of Huawei’s three executives who alternate as chairman, in a December letter to employees. “US restrictions are now our new normal and we are back to business as usual.”

Last year’s revenue was little changed from 2021’s 636.9 billion yuan ($91.6 billion), Xu said. That was less than Huawei’s double-digit growth a decade ago, but an improvement from its 5.9% decline in the first half.

He did not provide a breakdown by business segment, but Huawei reported 102.4 billion yuan ($16.1 billion) in revenue from industrial customers in 2021. Sales of smartphones and other devices fell 25.3% year-on-year to 101.3 billion yuan ($15 billion) in the first half of 2022.

The automotive unit, which supplies components and software for navigation, dashboard displays and vehicle systems management, played a role in five models released by three Chinese automakers.

The ruling party’s urgency to implement automation has increased as the size of China’s working-age population aged 16 to 59 has declined after peaking in 2011. This group decreased by approximately 5%. Their share of the population decreased from 70% to 62%.

Tianjin port managers told Huawei they were already having trouble finding and keeping truck drivers, according to Yue.

“This can help address the problem of the aging population,” Yue said.

Yue said Huawei has spoken to “people outside of China” who could use its port technology, but did not provide details.

The annual market for port-related networking technology is a modest $2 billion, but global sales of devices that connect the factory and medical, automotive and other devices total $600 billion a year, according to Budd. He said it has the potential to replace Huawei’s lost smartphone and other telecom sales as long as foreign buyers are not deterred by security concerns.

The port of Tianjin’s fleet of 88 battery-powered autonomous trucks will be charged by wind turbines, according to port spokesman Peng Pai.

“It is much safer and consumes clean energy,” Peng said.

In a third-floor control room with floor-to-ceiling windows overlooking the harbor, a dozen operators sit in front of six-screen displays showing footage of computer-controlled cranes lifting crates of cargo. on or off ships. Each one can supervise up to six cranes at a time, unlike a traditional operator who only serves one vessel.

“People had to work high in the cranes,” said Yang Jiemin, vice president of Tianjin Port Group. “Now our operators can sit in an office and monitor the equipment remotely.”

Operators take control of a crane or truck when sensors indicate a problem, according to Huawei’s Yue. He said the port’s goal is to get that “acquisition rate” down to 0.1%, or one container in 1,000, while computers handle the handling of the others from start to finish.

The high-speed network allows a crane or truck to respond to a command in 1/100 of a second, even if the ships are 500 meters (a third of a mile) from the control room, according to manager Liu Xiwang of the port information department.

“You don’t feel the delay,” said Liu.

Yue, the Huawei executive, was reluctant to say whether it needs processor chips or other foreign inputs that could be hampered by US sanctions.

“I really don’t know the answer to your question,” Yue said after being asked twice about the sources of the critical components. He compared it to buying a cup of coffee: “I don’t know who provides the cup, the coffee and the water.”

Joe McDonald, The Associated Press

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