Huawei’s home suppliers bask in trade war windfalls

By Xie Jun Source:Global Times Published: 2019/8/21 19:29:44

Telecoms giant resolutely shakes off its reliance upon US companies

Huawei showcases the Kirin 980 chip along with other devices at the South & Southeast Asia Commodity Expo and Investment Fair in Kunming, Southwest China's Yunnan Province in June. Photo: IC

Domestic electronic suppliers have reported surging first-half profits estimates thanks to their relationships with technology giant Huawei, experts said, with the latter speeding up efforts to nurture a supply chain in the Chinese mainland as pressure mounts from the US government. 

According to media reports, 56 Huawei suppliers have released first-half estimates so far, with 46 speaking of profits. Among them, 6 said that their net profits probably doubled. 

DBG Holdings, for example, estimated that its profits in the first six months of this year rose 117.5-134.6 percent year-on-year. Beijing Oriental Jicheng Co estimated that first-half net profits were up 150-180 percent year-on-year. 

Deng Anming, planning department director of Wingtec, a Shanghai-based manufacturer of electronic products and also a Huawei supplier, said that Wingtec's cooperation with Huawei has expanded from mobile phones to laptops and tablets in recent years. 

"Cooperating with Huawei and other outstanding clients has significantly helped Wingtec to expand its business and increase revenues," Deng told the Global Times on Wednesday. Wingtec will soon release their half-year financial data.

Wingtec also plans to increase capacity at its plant in Jiaxing, East China's Zhejiang Province and set up new plants in India and Indonesia to cope with surging orders from Huawei, which is adjusting its supply chain, Deng said. 

Huawei has been targeted by the US government in its attacks on China's high-tech sector. The US government has put Huawei on its export blacklist, which has pushed Huawei to reorganize its supply chain away from reliance on US companies.

Sun Yanbiao, head of Shenzhen-based research firm N1mobile, said that in the past, Huawei usually turned to domestic suppliers for low-end mobile phones. Starting from last year, it began to use domestic suppliers for medium-level products as well. 

"This is partly due to the rapid development of China's electronic supply chain, and partly due to Huawei's intention and efforts to nurture domestic suppliers particularly as external pressure weighs," Sun told the Global Times on Wednesday. 

Efforts by Huawei include cooperating with domestic companies to break technological bottlenecks and retrieving purchasing rights from original design manufacturers, Sun said. 

"Huawei has realized that the competition between China and US is for the long term, and even if the trade war subsides, there's still a need for Huawei to resolutely shake off its reliance upon the US supply chain," Sun said. 

According to Sun, Huawei's strategy shift has forced domestic electronic suppliers to get stronger to serve such a huge domestic client. 

Fu Liang, a Beijing-based telecom industry expert, told the Global Times that it's a "huge boost" for Chinese enterprises to get orders from Huawei, given the latter's large demand. 

"For small enterprises, even getting a tiny piece of Huawei's business means lots of money. The problem often lies in supply capacity. If a company's supply capacity and technological content meet Huawei's requirements, it will have a chance," he said.

Posted in: COMPANIES

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