Chinese conglomerate, Huawei, filed 8,607 wireless technology patents this year, more than any other global provider. The firm maintained rigorous networking technology research and development in 2020 despite encountering multiple headwinds.
However, the corporation’s current sourcing limitations means that it cannot utilize its new designs to expand its smartphone business.
Coping with Massive Challenges
Like the rest of the world, Huawei had to adjust its operations following the coronavirus outbreak. The company had to close its local facilities earlier this year after Beijing issued sweeping lockdown orders. The firm also lost access to American derived semiconductor technology in September because of a change in U.S. export controls. That meant it could not acquire certain essential cutting-edge electronic components after the third quarter.
Despite those obstacles, Huawei managed to significantly outpace both its domestic and foreign rivals in wireless technology patent filings. San Diego-based Qualcomm came in second worldwide by trying to copyright 5,807 new designs this year. Oppo, a Chinese telecom, ranked as number three with 5,353 filings.
The conglomerate’s success is largely due to its robust research and development spending this year. In March, the firm increased its R&D budget by $5.8 billion, which pushed its full-year investment to over $20 billion.
Huawei’s work in advancing telecommunications technology also extended into establishing new 5G standards. Strategy Analytics reported the company led the world in creating new fifth-generation mobile data networking specifications. If nothing else, it deserves credit for not letting multiple challenges impair its ability to expand its technological resources.
How will Huawei use its Cutting-Edge Technological Resources?
Despite occupying a place of leadership within the telecom industry, Huawei is not in a good place. Its inability to secure cutting-edge semiconductor manufacturing equipment or chips limits its ability to capitalize on R&D work. In August, the conglomerate also revealed it is running out of smartphone components and only has enough base station parts to fulfill its contracts through 2021.
Without the ability to fabricate or procure advanced semiconductors, Huawei’s core businesses are in doubt. It seemingly acknowledged the precarity of its situation by divesting its Honor subsidiary for a reported $15.4 billion.
So what will Huawei do with a portfolio of industry-leading technology it cannot turn into commercial products?
Firstly, the firm could sell its handset related intellectual property to its biggest rivals. Because the global handset market is extremely competitive, Xiaomi or Samsung would likely pay top dollar to acquire its technology.
Secondly, Huawei could hold onto its wireless portfolio while it establishes its presence in other sectors. In recent months, the conglomerate has ramped up its efforts to gain a foothold in the automotive and cloud computing fields. If those endeavors prove lucrative, the company could use those revenue streams to sustain itself and fund its telecommunications R&D work.
If it takes that path, Huawei may reenter the telecom field using locally sourced electronic component technology. The Chinese government committed to investing trillions of dollars in its domestic semiconductor industry. That initiative could cultivate a local chip making sector that meets all of the firm’s production needs, but the process would take several years.
With either roadmap, Huawei will have a tough road ahead that will involve significant business reorganization. But given the resiliency it has shown during its recent challenges, it seems foolish to dismiss the company just yet.