LightCounting publishes highlights from Huawei’s Analyst Summit 2021
LightCounting has just published a Research Note with key findings from Huawei’s 18th annual Global Analyst Summit, held in Shenzhen on April 12-14, 2021. LightCounting analysts attended the event in person and virtually.
It is a difficult time for Huawei. Several waves of US sanctions pushed the company to the brink by the end of 2020, as it lost access to critical CMOS components. Huawei’s management acknowledged that the inventory reserves will not last for very long and the company does not expect to have the sanctions lifted anytime soon. Huawei has to find a new strategy to stay in business, but management has shared few details of the new plan.
It is clear that Huawei’s consumer business was hit the hardest by the sanctions and the company was forced to sell a major part of its smartphone business near the end of last year. Maintaining inventory reserves for millions of IC chips used in phones, which are sold in millions of units per month, while competing with Apple and Samsung was not realistic.
Huawei’s new focus on the automotive industry announced at the event offers an alternative strategy for staying in a high volume consumer market. Products for this market will need IC chips, but these will also need LIDARs and AI software – the areas where Huawei is less constrained by the US sanctions. One week after HAS2021 ended, Huawei initiated sales of electric Chinese-made vehicles equipped with its electric drive, self-driving technology, and a version of its homegrown Harmony operating system. The first vehicle available for purchase is the Seres SF5, produced by Chongqing Sokon Industrial Group.
The company has no plans to exit the wireless and optical networking markets and these remain a top priority for Huawei. The company plans to meet demand by using inventory reserves of IC chips used in the networking systems, and could also add capacity by using pluggable optics made by other vendors. Improving operational efficiency by automation using software and AI is another focus area not subject of the US sanctions.
No new optical networking products were announced at the event. Instead, applications of solutions introduced over the last 12-18 months were highlighted by company’s experts and some of Huawei’s customers. The focus was clearly on the improved performance of the optics rather than on the Silicon.
One case study presented by Huawei showed the benefits of upgrading optical networks by using Super C band, realized by a customer in India. The results were impressive: a 300% increase in capacity with 40% reduction in the cost of ownership. Yet, it relies on 200G optics – all made internally at Huawei.
First deployments of 400G and demonstrations of 800G per wavelength optical transport technology were presented at HAS2021, but there was little said about 400ZR, which is the hottest topic among Huawei’s competitors in 2021. However, Huawei has developed a 400ZR module, and has been working on next generation 400G pluggable with longer reach.
Cisco paid $4.5 billion for Acacia this year to bring 400ZR technology in house and touted the benefits of 400ZR on its core routers at the company’s analyst event this week. Cisco’s vision is to collapse a multi-layer DWDM/Router/Switch optical network down to the IP layer and replace ROADMs with core routers. Huawei’s strategy is to take ROADMs to the next level with their Optical Cross Connect (OXC) technology.
Huawei’s Optix Supersite, announced at MWC2021 in Shanghai, is designed to reduce latency by extending the OXC-based network to PON OLTs. It is designed to enable service providers to grow revenues from the lucrative OTN private line market by expanding it from large companies to small and medium enterprises.
LightCounting will publish updated forecasts for 400G ZR/ZR+, WSS, PON, and other optical technologies in its comprehensive Market Forecast Report on April 29, 2021.
Huawei’s current challenges and strategies for overcoming them are a just a subset of the many issues facing the optical communications industry, discussed in-detail in LightCounting’s upcoming State of the Industry Report, to be published in May 2021.
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