Huawei is banking on a return to operational normalcy in 2023, with a focus on continued digital investments countering expectations for ongoing 5G radio access network (RAN) and technology restrictions in many Western countries.

Those plans were laid out by Eric Xu, current rotating chairman of the China-based vendor as part of his “New Year Message for 2023.” Xu quickly tackled Huawei’s ongoing challenges.

“In 2022, we successfully pulled ourselves out of crisis mode,” Xu wrote in kicking off the message. “U.S. restrictions are now our new normal, and we're back to business as usual. It's been all hands on deck for the past year with every single member of the Huawei team working hard to navigate challenges and improve the quality of our operations.”

Xu’s U.S. reference was in light of the Federal Communications Commission (FCC) late last year adopting new rules prohibiting U.S. telecommunication operators from acquiring and using networking and other equipment from Huawei, ZTE, and a handful of China-based telecommunication vendors deemed to pose a security threat to the nation’s communications network.

The FCC Report and Order states equipment from the named vendors “post an unacceptable risk to national security.” This equipment cannot gain FCC certification, which is needed for it to be legally sold and used in the United States, and it cannot be imported or marketed under any exemption rules.

The U.S. moves have been the harshest of Western countries, but have also been the basis for rules eventually adopted by its allies.

Xu stated that Huawei’s 2023 plans would include focused investments on “future-oriented basic research and open innovation, and focus our limited resources on value-creating domains.” The vendor also wants to focus on maintaining quality goals target growth opportunities, with a specific mention of the cloud market.

“In the ICT infrastructure business we need to be proactive in unearthing digital opportunities in various industries to drive effective growth,” Xu wrote. “Huawei Cloud needs to become the foundation – and enabler – of digital transformation for both Huawei itself and vertical industries. In digital power, we need to boldly invest in strategic opportunities, make our products more competitive, and effectively manage supply uncertainties of bulk commodities worldwide.”

Huawei exited 2022 as one of the world’s largest RAN vendors. Dell’Oro Group reported Huawei maintained its stranglehold in China, which due to that dominance and market size, allowed the vendor to lead the overall RAN market.

Huawei also remains a dominant cloud player in China. Canalys recently noted the vendor was No. 2 player in the country, controlling 19% of the market at the end of the third quarter of 2022.

Huawei’s International Employees Take Brunt

Xu acknowledged the vendor’s international struggles by specifically thanking its “frontline staff outside of China – those who have held the fort to serve our customers despite the adverse impacts of COVID-19 and external restrictions.”

Those frontline staff have in the past expressed frustration at how the vendor has been treated.

“The U.S. government bipartisanly is really pissed off at China,” Huawei USA Chief Security Officer (CSO) Andy Purdy told SDxCentral in an interview in early 2020. “They are sincerely mad at China and they’re sincerely concerned about the rise of China economically and militarily. … They’re frankly afraid that China wants to take over the world. So it’s that context that is shading this thinking. They’re trying to hurt Huawei to hurt China, and they’re going so far that they’re willing to risk hurting America more than they hurt Huawei.”

Xu stated that Huawei plans to institute greater autonomy for some of its local regions in order to “build more dynamic managerial teams.”

“Cultivating local teams is crucial to our long-term survival and development in local markets outside of China, so we need to actively build out and manage our local workforce,” he wrote.

Huawei Resetting 2023 Expectations

Xu’s comments also reset expectations set last year by Huawei founder Zhengfei Ren, who forecast a global economic slowdown and a substantial drop in consumption power for the next decade. In a company memo, he urged employees to shift the focus from the pursuit of revenue and scale to profit and cash flow to make sure the company survives the crisis.

“The next 10 years should be a very painful period in history, and the global economy will continue to decline,” Ren said in the memo. “Now, due to the impact of the war and the continued blockade and suppression by the United States, the global economy is unlikely to turn around in the next three to five years, and with the impact of the pandemic, there should not be a bright spot in the world.”

Ren at that time said Huawei would need to cut back or close businesses that cannot generate value and profit, and channel resources to more profitable operations, like its cloud operations. He also mentioned the company will “completely give up” markets in unspecified counties to prioritize the markets and customers that have value.