Huawei: anatomy of the Chinese tech giant

Translated by Mariateresa Tauro

In today's digital age, it's hard not to have come across the name Huawei at least once. A manufacturer of smartphones and computers, a pioneer in 5G and, more recently, artificial intelligence, Huawei is one of the global leaders in the ICT market. According to data provided by the company, Huawei operates in over 170 countries with more than 200,000 employees, and its technologies serve over 3 billion people. Impressive figures also emerge in terms of research and development: over the last ten years, Huawei has invested more than 1.2 trillion yuan, equivalent to approximately 146 billion euros. Beyond the data, what makes Huawei particularly interesting is its geopolitical dimension. The US sanctions, in force since 2019 for national security reasons, are a clear example of this. Huawei is a for-profit multinational corporation and, at the same time, a key instrument of Beijing's national strategy.

It should be highlighted that much information about Huawei's origins remains difficult to access. However, some details of its history are known. The company was founded in 1987 by Ren Zhengfei in the Shenzhen Special Economic Zone. To clarify, special economic zones are areas created in the 1980s as part of the reform and opening-up process promoted by Deng Xiaoping. This process aimed to attract foreign investments through tax, regulatory and administrative incentives. Founded with an initial capital of 20,000 yuan (approximately 2,500 euros), in its early years, Huawei operated as a simple reseller of telephone switchboards manufactured in Hong Kong. Only then will the company move on to producing its own technologies. In a market dominated by foreign competitors, Huawei has gradually made its way in a particularly hostile environment. The initial strategy was essentially a catch-up one, a tactic adopted by many companies in the Chinese market and consistent with the national strategy at the time. China was, in fact, a latecomer, namely a country whose industrial and technological development lagged behind that of the Western powers. The catch-up strategy, therefore, consists in bridging the technological gap with the West and getting back on track. It is interesting to note that, unlike most private Chinese companies, Huawei has never formed joint ventures with foreign companies, opting instead to develop its own capabilities. Huawei has always benefited from strong state support, thanks in part to Ren's ties to the People's Liberation Army, for which he worked as a researcher. This has enabled the company to secure government contracts, access a protected domestic market, benefit from financial support and enjoy diplomatic backing in its international expansion. The details of these operations remain largely unknown, but Beijing has certainly transformed Huawei into a national champion in the technology and communications sector. The company contributes indeed to China's efforts to achieve scientific and technological independence from foreign powers, a long-term ambition that has its roots in the Mao era and was relaunched under Deng Xiaoping. In other words, a constant concern in the history of contemporary China.

Huawei is a particularly interesting case study. It is a dual-faced reality: on the one hand, a multi-billion dollar giant focused on maximising profits; on the other, a national champion of the Chinese Communist Party and one of the central instruments of the country's industrial strategy. While the initial goal was to bridge the gap with the West, Beijing's ambition today is much greater: to become a leader in the development of cutting-edge technologies. In this context, Huawei plays an essential role in Chinese industrial policy. Just think of initiatives such as Made in China 2025, the Digital Silk Road, the Belt and Road Initiative and, more recently, the global race for artificial intelligence, areas in which Huawei is heavily involved. However, the state support that the company has always enjoyed also translates into a certain amount of political interference, making it difficult to draw clear boundaries between the company and the Party. One of the most debated issues concerns the structure of the company itself. Huawei describes itself as an employee-owned company. Nevertheless, in a 2019 study, Balding and Clarke revealed that Huawei is controlled by a holding company, 1% owned by founder Ren and the remaining 99% by a Trade Union Committee. Very little is known about this body: it is unclear who its leaders are, how its members are selected, or what its internal procedures are. The authors hypothesise that if the committee were to follow the typical operating methods of Chinese trade unions, Huawei could, in fact, be considered a state-owned enterprise. In any case, the issue remains a subject of debate and controversy.

In an international context where technology is exerting a growing influence on global balances, Huawei's role in China's national strategy is becoming increasingly central. Back in 2006, with the publication of the Medium to Long-Term Plan for the Development of Science and Technology, Beijing had already made its vision clear: technology as the foundation of national power and the driving force behind the transformation of the international balance of power. For China, it is the ability to innovate that distinguishes a simply large country from a true power. Today, the concept of 科技自立自强 (kējì zìlì zìqiáng), namely self-reliance and self-strengthening in science and technology, has become even more urgent in light of intensifying competition with the United States. In this context, the Chinese government has chosen to fully leverage Huawei's potential. The company is a key player in the Digital Silk Road, the digital pillar of the Belt and Road Initiative, which aims to make China the centre of a new global digital network through projects such as 5G, submarine cables and data centres.

Currently, one technology in particular is the focus of attention for Beijing and Huawei: semiconductors. Essential for the development of the industries of the future (from quantum computing to electric vehicles, from lithium-ion batteries to photovoltaic cells, to artificial intelligence), semiconductors represent a historical weakness for China, which has always been dependent on Western technologies. Although Beijing excels in design and assembly, it remains deficient in the more sophisticated stages of the value chain, such as EUV lithography, advanced materials and electronic design automation. Bridging this gap has become a top priority. After 2019, the year of the first US sanctions, Huawei launched multi-billion-dollar investments in semiconductor research and development, a sector that had previously been marginal in the company's strategy. The goal of Huawei and China is not only to produce advanced nodes, but to make the entire semiconductor supply chain completely autonomous. According to Bloomberg, the initiative was promoted from the top: since 2021, the central government and the Shenzhen government would have provided Huawei with over $30 billion in funding. According to various Western estimates, the technological gap between China and the West in the semiconductor sector could only be bridged within a period of 3-5 years. However, as is often the case, technological progress follows unpredictable trajectories. Last July, during the World Artificial Intelligence Conference (WAIC) in Shanghai, Huawei unveiled CloudMatrix 384, a new artificial intelligence infrastructure built with 384 Ascend 910C chips, capable for the first time of competing with the GB200 NVL72 from US company Nvidia, until then the undisputed market leader.

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