China's Huawei has shifted its focus to one of its subsidiary businesses to "secure survival", specifically the cloud computing division, Financial Times reported, citing anonymous sources within the industry.
Huawei's cloud computing business, which involves lending out computer power, storage, and even access to AI-like technologies to other companies, is far from being on top in the domestic market, but recently received a boost in development. According to the newspaper, the Chinese government supplies the company with cloud contracts and the tech giant itself has redirected its resources to the business in order to solidify its position on the market.
Cloud Business Still Packed With US Chips
The Chinese tech giant shifted its focus to the cloud services branch because, unlike the smartphone and telecom equipment divisions, it has not been affected by Washington's bans on the sale of US tech to Huawei, FT reported. While the quality of chips in smartphones and equipment for carriers and ISPs has reportedly decreased, the company's systems running cloud operations can still receive chips from makers such as Intel.
"The quality of the chips in it may not be as good as before, but for the other products that are not impacted, we will offer something with a little better quality, and the customers can accept it", a source involved in Huawei's cloud business told FT.
According to several anonymous semiconductor industry executives cited by the newspaper, numerous companies in the field managed to get licenses from the US government to deliver chips to Huawei's cloud computing division before the latest May and August bans came into effect. Since the bans are not retroactive, these companies, including Intel, can continue their dealings with the Chinese tech company.
The supply of these chips, along with efforts to conquer the market - which had previously not been focused on, is Huawei's strategy to stay afloat while it deals with the consequences of the US crackdown campaign that started in 2019 with the White House prohibiting national carriers from using the Chinese giant's equipment. Following this step, Washington also banned American software and hardware companies from supplying Huawei with US-made technologies without a special licence from the Department of Commerce. The US also tried to apply the law extraterritorially, demanding that foreign firms using American technologies in their products also stop selling these products to Huawei.
Both Huawei and the Chinese government have condemned the US efforts, vowing to challenge its policies in court. The tech company has also announced that it will be undertaking efforts to switch its operations to non-American hardware and software to mitigate the effects of the ban.