Huawei is selling its business again? Insiders respond!

Latest update time：2021-08-30 20:11

Reads：

On August 5, a message circulated on the "Communication People's Home" forum: "Huawei's server product line will be sold in a package." According to AI Finance, a source said that the buyer may be Suzhou State-owned Assets Supervision and Administration Commission . It is reported that due to problems with the supply of Intel chips, Huawei mainly sells the server business using Intel's X86 architecture , while retaining the server business using the ARM architecture Kunpeng chip.

According to a report by China Business Network on August 6, a person close to Huawei's server business said that Huawei will not give up its server business, but due to production obstructions, even if it can design chips based on Intel architecture, it has no way to produce them, and its business has been affected. At present, Huawei has not responded to the above news.

In the operator's centralized server procurement, Huawei failed to make the list just because of chip shortage?

On May 15, 2019, former US President Trump, citing national security concerns, invoked the International Emergency Economic Powers Act, declared a national emergency, and added Huawei to the Commerce Department's "Entity List," restricting suppliers from selling US goods and technology to the company.

In May 2020, sanctions were further escalated, requiring manufacturers outside the United States to obtain export licenses from the U.S. government when selling semiconductor chips using U.S. technology or design to Huawei. In addition, the U.S. Department of Commerce announced regulations last year to restrict Huawei from purchasing direct products produced by specific U.S. technology or software.

The Biden administration extended the above-mentioned executive order on May 11, 2021, continuing to prevent Huawei from gaining space in the US market. In addition, the US Congress has begun to investigate whether companies have improperly supplied Huawei; the US Department of Commerce has issued subpoenas to several Chinese communications equipment suppliers to launch security reviews.

After a series of crackdowns by the United States, Huawei's chip, mobile phone and other businesses have been affected, including its server business.

Before being included in the US "Entity List", Huawei's server business had annual sales of 30 billion to 40 billion yuan. According to a report by research firm IDC, in the global server market in the third quarter of 2020, Dell Technologies and H3C ranked first with revenue shares of 20.7% and 15.9% respectively, and Inspur ranked third with a revenue share of 9.4%. Lenovo ranked fourth with a share of 5.9%, and Huawei ranked fifth with a share of 4.9% .

(Source: Driver Home)

According to the "China Server Quarterly Tracking Report" released by IDC, in the third quarter of 2020, Huawei's FusionServer pro intelligent server ranked first in China in terms of both shipments and sales in the x86 standard server market in China. Among them, rack and high-density model servers ranked first in single category shipments and sales; from the perspective of the industry market, Huawei's FusionServer intelligent server ranked first in China in terms of shipments and sales in both the telecommunications industry and the Internet industry.

For a long time, Huawei servers have chosen Intel x86 architecture chips and ARM architecture Kunpeng chips. After the United States issued sanctions, Huawei's server sales have declined significantly . Huawei 's cooperation with Intel has not been officially resumed, and the server business using Intel's X86 architecture has been directly hit.

Many industry insiders speculate that chip supply issues are plaguing Huawei. In June 2021, China Telecom issued a centralized procurement announcement, "China Telecom Server (2021) Centralized Procurement Project-Bid Package 6: GPU Server (I Series) Winning Candidate Change Announcement", and the final winning candidates were Inspur, Unigroup Huashan and FiberHome Communications . The winning candidates for Bid Package 6 announced in March this year were Inspur, Huawei and Unigroup Huashan.

Announcement released in June 2021

Announcement released in March 2021

(Photo source: C114 Communications Network)

Data released by China Mobile's Procurement and Tendering Network showed that on June 7, the results of China Mobile's computing server procurement were released. ZTE, Inspur, Tsinghua Unigroup, and FiberHome won the bid, while Huawei unexpectedly failed to make the list .

All these signs inevitably lead to speculation. According to "Operator Finance", it is because Huawei's own chips are missing, which leads to Huawei's servers being out of stock and having to give up.

Breaking the US monopoly, Kunpeng 920 is facing difficulties again?

According to data from research firm IDC, in 2020, my country's server market shipments reached 3.5 million units, a year-on-year increase of 9.8%, and the market size was US$21.649 billion, a year-on-year increase of 19.0%. Among them, the X86 server market shipments reached 3.4393 million units, a year-on-year increase of 8.1%; the market size was US$20.823 billion (about RMB 143.32 billion), a year-on-year increase of 17.7%.

Although Intel's X86 chip servers occupy most of the market, Huawei is actively breaking this monopoly.

In 2019, Huawei released the ARM-compatible processor Kunpeng 920 and launched the TaiShan series of server products and cloud services based on Kunpeng 920. Kunpeng 920 is manufactured using 7nm process, can support 32/48/64 cores, has a main frequency of up to 2.6GHz, and supports 8-channel DDR4, PCIe 4.0 and 100G RoCE network.

(Image source: Baidu Encyclopedia video screenshot)

In July 2021, it was reported that Huawei opened an ARM-based data center at its office in Moscow, Russia. The data center is designed to provide local customers with access to its ARM-based TaiShan servers, which use the Kunpeng 920 processor developed by its subsidiary HiSilicon Semiconductor. According to PConline, the head of Huawei's Russian intelligent computing system department said: "High-performance ARM cores have not only proven themselves in a large number of parallel computing tasks such as big data, virtualization systems, databases, storage systems, but also perform well in other tasks. Tests have shown that in many scenarios, ARM servers are already fully competitive with solutions based on the x86 architecture."

However, at present, the United States's suppression of Huawei continues to escalate, and Huawei may find it difficult to find a manufacturer to produce Kunpeng chips , and fall into trouble.

In May 2021, Ren Zhengfei was at the "2020 Gold Medal Employee Representative Symposium" when an employee of Huawei's Cloud and Computing BG business asked: "I am now working on Kunpeng-related business. Do you have any guidance on Kunpeng?" Ren Zhengfei made it clear: "Just do it unswervingly. It is impossible to stop halfway. How many partners will be harmed by that?"

—End—

This article is compiled by Xinshiye from AI Finance, Huawei official website, Driver Home, etc. It is for communication and learning purposes only and does not constitute any investment advice. If you have any questions, please contact us at info@gsi24.com.