Huawei Technologies will supply over half of the 5G base stations ordered by China Mobile between 2023 and 2024, a deal which analysts say will help shore up its core revenue base after losing its lucrative smartphone business amid tough U.S. sanctions. Huawei secured 52% of China Mobile’s 5G base station orders, the largest portion of the contracts put out for tender this year. The deal would involve the sale of 45,426 5G base stations worth about CNY4.1 billion, according to calculations by the South China Morning Post using bid details published by China Mobile. Huawei’s rival ZTE, also based in Shenzhen, was the second-largest winner, accounting for about 26% of the contracts awarded, equivalent to sales of 23,227 5G base stations. Chinese company Datang, Finland’s Nokia and Sweden’s Ericsson were the remaining successful bidders. The successful firms were announced about a month after China Mobile solicited equipment suppliers to bid for two contracts for the installation of a total of 86,980 5G base stations between 2023 and 2024, adding to China’s existing 5G network, the world’s largest. The China Mobile tender represents the biggest 5G base station contracts awarded this year.
The China Mobile 5G win would be a boon for Huawei, whose revenue growth has lost steam in recent years after the U.S. restricted its access to advanced semiconductors, said Yang Guang, Senior Telecoms Analyst at research firm Omdia. China’s state-run telecom companies have been an important revenue source for Huawei, which was founded in Shenzhen in 1987 by Ren Zhengfei, initially to sell telephone exchange switches. Washington has barred Huawei from purchasing off-the-shelf advanced semiconductors or using wafer foundry services to make them, citing national security grounds, dealing a heavy blow to its once lucrative handset business. Last year, revenue from Huawei’s consumer business, which includes smartphones and other consumer electronics, declined 11.9% year-on-year to CNY214.5 billion.
Privately-held Huawei reported a total of CNY642.3 billion in sales for the full year of 2022, representing a slim 0.9% growth from CNY636.8 billion in 2021. After a 5G buildout frenzy over the past four years, “China’s 5G infrastructure development has already slowed and passed its peak”, Yang said. “So in the long run, Huawei still has to find a way to solve its predicament in semiconductors.” China has installed a total of 2.38 million base stations as of the end of February, the South China Morning Post reports.
Meanwhile, EU Commissioner for the Internal Market Thierry Breton urged more member states to restrict the use of China's Huawei and ZTE 5G equipment in Europe's telecoms networks, citing so-called risks to the bloc's collective security. But Chinese observers believe that such actions go against the current and will lead Europe nowhere, urging Europe to maintain its strategic autonomy and not let noise from the U.S. affect China-Europe relations. Currently, only 10 of the 27 EU member states have restricted or excluded "high-risk" vendors from their telecom networks. Chinese Foreign Ministry Spokesperson Wang Wenbin slammed the European Commission's claim as being a typical "presumption of guilt" when it alleged that Huawei and ZTE pose security risks without providing any evidence. The 5G hype is, in essence, the U.S. using security as a pretext to restrict China's advanced technology development and demanding that Europe follow suit by politicizing the issue, Sun Keqin, Research Fellow at the China Institutes of Contemporary International Relations, told the Global Times.
