Inside Huawei's Secret HQ, China Is Shaping the Future
By Mark Bergen
2018年12月13日 上午5:00 [GMT+8] Updated on 2018年12月13日 下午12:09 [GMT+8]
The surprise arrest of Meng Wanzhou, chief financial officer of Huawei Technologies Co., has thrust the company into a political firestorm and deepened a core threat: that more and more countries will blacklist its switches, routers and phones out of growing concern that they could be hijacked by foreign spies.
Yet inside Huawei’s Shenzhen headquarters, a secretive group of engineers toil away heedless to such risks. They are working on what’s next -- a raft of artificial intelligence, cloud-computing and chip technology crucial to China’s national priorities and Huawei’s future. As the trade war drags on, China’s government has pushed to create an industry that is less dependent on cutting-edge U.S. semiconductors and software.
The Huawei campus in Shenzhen.
Photographer: Brent Lewin/Bloomberg
Meng’s detention, far from slowing these ambitions, will instead speed the fall of this “silicon curtain,” when the U.S. and China will no longer provide chips to one another, Gus Richard, a Northland Capital Markets analyst, wrote in a recent report. "Huawei is the icon of the rise of China industrial power,” he wrote.
Though Meng was granted bail by a Canadian court, she must remain in the Vancouver area as she awaits possible extradition to the U.S. on fraud charges.
Meng Wanzhou leaves her home under the supervision of security on Dec. 12.
Photographer: Ben Nelms/Bloomberg
The company is investing massive resources in next-generation technology, seeking to replicate the success it has had in other areas. Over the past decade, the closely held firm has quietly emerged as a titan in networking and telecom gear, now second only to San Jose, California-based Cisco Systems Inc.
Then Huawei entered the smartphone market, and in a surprise to most observers toppled Apple Inc. in market share earlier this year. In the September quarter, the Chinese company had 15 percent of the world’s shipments, trailing only Samsung Electronics Co., according to data from IDC. Just two years earlier, it had about 9 percent of the market.
Huawei’s technical expertise, combined with its ties to China’s blue-chip firms and government, could let it engineer another surprise in what many see as the critical backbone of future technology.
Those ambitions are consistent with the government’s goals. President Xi Jinping wants China to be a self-sustaining leader in semiconductors -- Huawei is showing it can. Xi wants China to have a global footprint -- Huawei has one. Xi wants China to move from basic manufacturing to more lucrative industries, with the country capturing the benefits -- and Huawei does that, too.
Xi Jinping with Huawei President Ren Zhengfei.
Photographer: Matthew Lloyd/Pool via Bloomberg
A sprawling room at its Shenzhen campus is filled with digital mock-ups of how banks, retail stores and city streets would look like with Huawei’s technological capabilities. That tech is created a short drive away, inside a research lab nicknamed the "White House." Visitors there are rare. Yet the mock-up room, called the "vertical industries exhibition hall," welcomes guests and imagines a future where companies and governments use Huawei’s cloud and AI to crunch data, spur sales and make cities see and hear everything.
Huawei’s Enterprise Business Group, which trails networking and smartphones in sales, sells components and services for internet-connected devices, smart cities and cloud products. It will net more than $10 billion in revenue this year, about a 10th of the company’s overall total, Qiu Heng, the division’s chief marketing officer, said in an interview in November.
The company expects enterprise sales to double every two years. That means the business would lap $100 billion in 2025, the year China’s government has set to reach independence in technological production. And those projections are without an American business -- Qiu said estimates for his division exclude the U.S., where Huawei is a political pariah.
How Huawei Arrest Extends Troubled History With U.S.: QuickTake
In one area, Huawei has a head start. In the past two years, the largest internet companies formed semiconductor units to improve their cloud offerings and AI applications, such as image recognition and voice assistance. Huawei’s chip design unit, HiSilicon, has been around since 2004. It started working on customized chips to handle complex algorithms on hardware before the cloud companies did. Research firm Alliance Bernstein estimates that HiSilicon is on pace for $7.6 billion in sales this year, more than doubling its size since 2015.
“Huawei was way ahead of the curve,” said Richard, the analyst.
Yet in terms of sales and operations, Huawei’s cloud business is meager next to its larger rivals. The company spent about $13 billion on research and development in 2017, up more than 17 percent from the previous year. Its rivals in the cloud market have cut similarly sized checks. “Huawei has concluded that if it does not offer future solutions via the cloud, where its customers are migrating, someone else will,” said Siow Meng Soh, a research manager for GlobalData Plc.
While Huawei is pressing ahead with its research, there are some signs Meng’s detention is starting to affect the company’s operations. A Japanese supplier of industrial robots said Huawei has frozen orders for its machines after the arrest.
In software, Huawei is playing also a bit behind rivals. In AI fields, such as deep learning and computer-vision systems, the company is “feverishly seeking to catch up” to U.S. titans, said Oren Etzioni, head of the Allen Institute for Artificial Intelligence. "Huawei has data and government support, but are at a substantial disadvantage when it comes to AI,” he added.
Still, if any company could erase that hindrance quickly, it would be Huawei.
Recent research from computer scientists in Zurich looked at the processing chops of Android phones and put the chips from HiSilicon at the top. Like its rivals, Huawei is throwing everything into its cloud package. It recently debuted a set of AI software tools and in October released a new specialized chip, called the Ascend.
“No other chip set has this kind of capability of processing,” Qiu said.
Huawei unveils the Ascend 310 chip in Nov. 2018.
Photographer: Imaginechina via AP Photo
Few chip-makers have such easy access to customers ready to invest deeply in AI. In Huawei’s case, that customer is the Chinese government. The company sees a massive opening in the national ambition to plug every city street, camera and piece of infrastructure into a digital grid. Huawei’s aim, said analyst Soh, is to become the “nerve center” for smart cities. Police in Shenzhen, which is just across the border from Hong Kong, are using Huawei’s chips for several traffic cameras. Qiu said a single chip set can process video footage for as many as 16 cameras, a fourfold jump in computing power.
The cloud business allows Huawei to rely on its home market. While its overall sales are split about evenly in and outside of China, close to 60 percent of the enterprise business comes from China, Qiu said. In the U.S., Huawei’s size makes it a ready target for national security hawks; it loomed behind President Donald Trump’s decision to block a $117 billion merger.
Qiu said the company’s products are compliant with Europe’s General Data Protection Regulation, meaning that its clients, not Huawei, own and store data used in the applications. Huawei must tread carefully in Europe, where it has cloud partnerships with several carrier clients including Germany’s Deutsche Telekom AG. In the months before the CFO’s arrest, U.S. officials have reportedly asked counterparts in Germany and several European nations to drop Huawei equipment for 5G networks over security concerns. A Deutsche Telekom representative declined to comment.
In a statement, a Huawei spokesman said the company operates in more than 170 countries and criticized the reported moves by U.S. officials. “If a government’s behavior extends beyond its jurisdiction, such activity should not be encouraged,” the spokesman said.
GlobalData’s Soh suggested that Huawei should turn to more welcoming markets across Latin America and Africa for its enterprise business, particularly after Meng’s arrest in Canada. “As long as they stick to the game plan, they still have a lot of room to grow,” he said. “Unless the U.S. manages to get their allies to stop buying them.”
(An earlier version of this story corrected the spelling of the Qiu Heng’s name in the ninth paragraph.)
— With assistance by Stefan Nicola, and Yuan Gao
2018年12月13日 上午5:00 [GMT+8] Updated on 2018年12月13日 下午12:09 [GMT+8]
華為技術有限公司首席財務官孟萬洲的突然被捕，使公司陷入政治風暴，加深了核心威脅：越來越多的國家將其交換機，路由器和手機列入黑名單，因為他們越來越擔心被外國間諜劫持。
然而，在華為深圳總部內部，一個秘密的工程師團隊不顧這些風險。他們正在研究下一步 - 大量的人工智能，雲計算和芯片技術對於中國的國家優先事項和華為的未來至關重要。隨著貿易戰的拖延，中國政府已經推動創建一個較少依賴尖端的美國半導體和軟件的行業。
華為校園在深圳。攝影師：Brent Lewin / Bloomberg
北國資本市場分析師格斯·理查德（Gus Richard）在最近的一份報告中寫道，當美國和中國不再相互提供芯片時，孟的拘留遠不會減緩這些雄心壯志，反而會加速這種“矽幕”的垮台。 “華為是中國工業強國崛起的標誌，”他寫道。
雖然孟被加拿大法院保釋，但她必須留在溫哥華地區，等待可能以欺詐指控引渡到美國。
孟萬洲於12月12日在安全的監督下離開了她的家。攝影師：Ben Nelms / Bloomberg
該公司正在為下一代技術投入大量資源，尋求復制其在其他領域的成功。在過去的十年中，這家知名公司悄然成為網絡和電信設備的巨頭，現在僅次於加利福尼亞州聖何塞的思科系統公司。
然後華為進入了智能手機市場，令大多數觀察者驚訝的是，今年早些時候大多數觀察者推翻了蘋果公司的市場份額。根據IDC的數據，在9月季度，這家中國公司的出貨量佔全球出貨量的15％，僅落後於三星電子公司。就在兩年前，它佔據了大約9％的市場份額。
華為的技術專長，加上與中國藍籌公司和政府的關係，可以讓它在眾多人看來是未來技術的關鍵支柱中再創造一個驚喜。
這些雄心壯志符合政府的目標。習近平主席希望中國成為半導體領域的自我維持領導者 - 華為正在展示它。習希望中國擁有全球足跡 - 華為有一個。習近平希望中國從基礎製造業轉向利潤更高的行業，國家將獲益 - 而華為也是如此。
習近平與華為總裁任正非。攝影：Matthew Lloyd / Pool via Bloomberg
深圳校區的一個龐大的房間充滿了數字模型，展示了銀行，零售商店和城市街道與華為技術能力的相似之處。這項技術距離一個綽號為“白宮”的研究實驗室只有很短的車程。遊客很少見。然而，名為“垂直行業展廳”的模擬室歡迎客人，並想像未來公司和政府使用華為雲和人工智能來處理數據，刺激銷售並讓城市看到和聽到一切。
華為企業業務集團負責銷售網絡和智能手機，銷售互聯網設備，智能城市和雲產品的組件和服務。該部門的首席營銷官邱恆在11月的一次採訪中表示，今年的收入將超過100億美元，約占公司總收入的十分之一。
該公司預計企業銷售額每兩年翻一番。這意味著，在中國政府將在技術生產方面實現獨立的2025年，該業務將耗資1000億美元。而這些預測沒有美國企業 - 邱說，他的部門估計不包括美國，而華為是一個政治賤民。
在一個領域，華為有一個良好的開端。在過去兩年中，最大的互聯網公司組建了半導體部門，以改善其云產品和人工智能應用，如圖像識別和語音輔助。華為的芯片設計部門HiSilicon自2004年以來一直存在。
The surprise arrest of Meng Wanzhou, chief financial officer of Huawei Technologies Co., has thrust the company into a political firestorm and deepened a core threat: that more and more countries will blacklist its switches, routers and phones out of growing concern that they could be hijacked by foreign spies.
Yet inside Huawei’s Shenzhen headquarters, a secretive group of engineers toil away heedless to such risks. They are working on what’s next -- a raft of artificial intelligence, cloud-computing and chip technology crucial to China’s national priorities and Huawei’s future. As the trade war drags on, China’s government has pushed to create an industry that is less dependent on cutting-edge U.S. semiconductors and software.
The Huawei campus in Shenzhen.
Photographer: Brent Lewin/Bloomberg
Meng’s detention, far from slowing these ambitions, will instead speed the fall of this “silicon curtain,” when the U.S. and China will no longer provide chips to one another, Gus Richard, a Northland Capital Markets analyst, wrote in a recent report. "Huawei is the icon of the rise of China industrial power,” he wrote.
Though Meng was granted bail by a Canadian court, she must remain in the Vancouver area as she awaits possible extradition to the U.S. on fraud charges.
Meng Wanzhou leaves her home under the supervision of security on Dec. 12.
Photographer: Ben Nelms/Bloomberg
The company is investing massive resources in next-generation technology, seeking to replicate the success it has had in other areas. Over the past decade, the closely held firm has quietly emerged as a titan in networking and telecom gear, now second only to San Jose, California-based Cisco Systems Inc.
Then Huawei entered the smartphone market, and in a surprise to most observers toppled Apple Inc. in market share earlier this year. In the September quarter, the Chinese company had 15 percent of the world’s shipments, trailing only Samsung Electronics Co., according to data from IDC. Just two years earlier, it had about 9 percent of the market.
Huawei’s technical expertise, combined with its ties to China’s blue-chip firms and government, could let it engineer another surprise in what many see as the critical backbone of future technology.
Those ambitions are consistent with the government’s goals. President Xi Jinping wants China to be a self-sustaining leader in semiconductors -- Huawei is showing it can. Xi wants China to have a global footprint -- Huawei has one. Xi wants China to move from basic manufacturing to more lucrative industries, with the country capturing the benefits -- and Huawei does that, too.
Xi Jinping with Huawei President Ren Zhengfei.
Photographer: Matthew Lloyd/Pool via Bloomberg
A sprawling room at its Shenzhen campus is filled with digital mock-ups of how banks, retail stores and city streets would look like with Huawei’s technological capabilities. That tech is created a short drive away, inside a research lab nicknamed the "White House." Visitors there are rare. Yet the mock-up room, called the "vertical industries exhibition hall," welcomes guests and imagines a future where companies and governments use Huawei’s cloud and AI to crunch data, spur sales and make cities see and hear everything.
Huawei’s Enterprise Business Group, which trails networking and smartphones in sales, sells components and services for internet-connected devices, smart cities and cloud products. It will net more than $10 billion in revenue this year, about a 10th of the company’s overall total, Qiu Heng, the division’s chief marketing officer, said in an interview in November.
The company expects enterprise sales to double every two years. That means the business would lap $100 billion in 2025, the year China’s government has set to reach independence in technological production. And those projections are without an American business -- Qiu said estimates for his division exclude the U.S., where Huawei is a political pariah.
How Huawei Arrest Extends Troubled History With U.S.: QuickTake
In one area, Huawei has a head start. In the past two years, the largest internet companies formed semiconductor units to improve their cloud offerings and AI applications, such as image recognition and voice assistance. Huawei’s chip design unit, HiSilicon, has been around since 2004. It started working on customized chips to handle complex algorithms on hardware before the cloud companies did. Research firm Alliance Bernstein estimates that HiSilicon is on pace for $7.6 billion in sales this year, more than doubling its size since 2015.
“Huawei was way ahead of the curve,” said Richard, the analyst.
Yet in terms of sales and operations, Huawei’s cloud business is meager next to its larger rivals. The company spent about $13 billion on research and development in 2017, up more than 17 percent from the previous year. Its rivals in the cloud market have cut similarly sized checks. “Huawei has concluded that if it does not offer future solutions via the cloud, where its customers are migrating, someone else will,” said Siow Meng Soh, a research manager for GlobalData Plc.
While Huawei is pressing ahead with its research, there are some signs Meng’s detention is starting to affect the company’s operations. A Japanese supplier of industrial robots said Huawei has frozen orders for its machines after the arrest.
In software, Huawei is playing also a bit behind rivals. In AI fields, such as deep learning and computer-vision systems, the company is “feverishly seeking to catch up” to U.S. titans, said Oren Etzioni, head of the Allen Institute for Artificial Intelligence. "Huawei has data and government support, but are at a substantial disadvantage when it comes to AI,” he added.
Still, if any company could erase that hindrance quickly, it would be Huawei.
Recent research from computer scientists in Zurich looked at the processing chops of Android phones and put the chips from HiSilicon at the top. Like its rivals, Huawei is throwing everything into its cloud package. It recently debuted a set of AI software tools and in October released a new specialized chip, called the Ascend.
“No other chip set has this kind of capability of processing,” Qiu said.
Huawei unveils the Ascend 310 chip in Nov. 2018.
Photographer: Imaginechina via AP Photo
Few chip-makers have such easy access to customers ready to invest deeply in AI. In Huawei’s case, that customer is the Chinese government. The company sees a massive opening in the national ambition to plug every city street, camera and piece of infrastructure into a digital grid. Huawei’s aim, said analyst Soh, is to become the “nerve center” for smart cities. Police in Shenzhen, which is just across the border from Hong Kong, are using Huawei’s chips for several traffic cameras. Qiu said a single chip set can process video footage for as many as 16 cameras, a fourfold jump in computing power.
The cloud business allows Huawei to rely on its home market. While its overall sales are split about evenly in and outside of China, close to 60 percent of the enterprise business comes from China, Qiu said. In the U.S., Huawei’s size makes it a ready target for national security hawks; it loomed behind President Donald Trump’s decision to block a $117 billion merger.
Qiu said the company’s products are compliant with Europe’s General Data Protection Regulation, meaning that its clients, not Huawei, own and store data used in the applications. Huawei must tread carefully in Europe, where it has cloud partnerships with several carrier clients including Germany’s Deutsche Telekom AG. In the months before the CFO’s arrest, U.S. officials have reportedly asked counterparts in Germany and several European nations to drop Huawei equipment for 5G networks over security concerns. A Deutsche Telekom representative declined to comment.
In a statement, a Huawei spokesman said the company operates in more than 170 countries and criticized the reported moves by U.S. officials. “If a government’s behavior extends beyond its jurisdiction, such activity should not be encouraged,” the spokesman said.
GlobalData’s Soh suggested that Huawei should turn to more welcoming markets across Latin America and Africa for its enterprise business, particularly after Meng’s arrest in Canada. “As long as they stick to the game plan, they still have a lot of room to grow,” he said. “Unless the U.S. manages to get their allies to stop buying them.”
(An earlier version of this story corrected the spelling of the Qiu Heng’s name in the ninth paragraph.)
— With assistance by Stefan Nicola, and Yuan Gao
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