Foreign media: Arm will become an increasingly important partner for Huawei's cloud computing

Recently, the well-known communications industry media lightreading analyzed that the good cooperation between Huawei and Arm not only circumvents the US technology sanctions, but Huawei's data centers in Russia will also undertake increasingly important tasks.

The article believes that servers in large data centers usually use Intel or AMD chips based on the x86 architecture. But last summer, Huawei set up a data center in Moscow. Due to various complex reasons, this move may have unexpectedly benefited.

The US sanctions on Huawei have caused many suppliers to stop supplying Huawei, but the Arm architecture, which has a strong presence in the mobile terminal, has benefited Huawei a lot. Against the backdrop of the Russian-Ukrainian conflict and Western sanctions against Russia, Huawei's Moscow data center has suddenly assumed a more important role.

The article points out that the cloud business supported by network infrastructure seems to be booming. Huawei did not announce its performance or release key business data for 2021, but its enterprise division, including cloud computing, saw sales increase by 23% in 2020, while total revenue increased by only 4%. Consulting research firm Canalys believes that Huawei is already China's second-largest cloud provider (after Alibaba), with a market share of about 17%.

In addition to China, the Center for Strategic and International Studies (CSIS), a think tank in Washington, D.C., is also paying attention to Huawei's cloud computing development. According to data released by CSIS in May last year, Huawei had successfully reached 70 deals with governments or state-owned enterprises in 41 countries at that time.

Although many Western countries are increasingly excluding Huawei, many countries in the third world are still embracing Huawei.

This worries Huawei critics in the US, such as Senator Tom Cotton and Congressman Mike Gallagher. In a letter to US Secretary of State Blinken last September, they said that the market expansion of Huawei's cloud computing is worthy of attention. John Strand, founder of Strand Consult, also believes that the US's "clean-up operation" has ignored the development of Huawei's cloud computing.

In addition, the Russian-Ukrainian war will also enhance Huawei's role. Unlike equipment suppliers such as Ericsson and Nokia, Huawei has not announced a suspension of deliveries to Russian customers. Russian cloud computing company Yandex has been severely hurt by European and American sanctions. On March 3, the company said it was at risk of bankruptcy and said its current technology supply would last for 12 to 18 months.

"If the hardware, software or other technology used in our business or products is not available for an extended period of time and no replacements are available, our business could be materially and adversely affected in the near future," the company said in a statement on its website.

As long as Chinese foundries can produce the chips, the Arm chips Huawei needs can keep it outside the scope of US sanctions. For a while in 2019, Arm seemed ready to join the ranks of American chipmakers. According to the BBC at the time, a company memo showed that some of Arm's designs used "US technology", making them subject to US rules. However, a few months later, Arm seemed to change its mind and believed that these key designs "originated in the UK." It also continues to maintain a partnership with Huawei. This is also part of the reason why Arm's share of the data center market doubled last year. Manoj Sukumaran, chief analyst at market research firm Omdia, said: "Arm's central processing units accounted for about 5% of all servers shipped in the third quarter of 2021, while at the end of 2020, it accounted for only 2.5%."

Unable to buy American chips, Huawei has invested resources in Arm-based alternatives. Kunpeng chips are used in its own cloud business. Manoj Sukumaran: "Huawei sold its x86 business in the second half of last year and is now fully focused on Arm servers."

Nvidia's failed acquisition of Arm also benefits Huawei. If the ownership is purchased by a US company, Arm may lose its neutral status.

Arm has become a driving force for Huawei's expansion of cloud computing technology in Russia and other countries.

But Huawei is still preparing for a rainy day. Concerned that Arm might eventually cut off deals altogether, it has been experimenting with RISC-V, an open source alternative to Arm and x86. But according to Sukumaran's data, RISC-V has little support in the hardware community today and has a relatively small presence in servers.