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US Ban Forces China’s Huawei To Focus On Cloud Computing For Survival

US Ban Forces China’s Huawei To Focus On Cloud Computing For Survival
The Chinese telecom equipment making giant Huwei’s cloud business still has access to American chips despite the severe ban on the company by the Trump administration of the United States and therefore the firms, which has been caught in the cross fire of the strained US-China relations and the trade war, has decided to focus building its cloud business. This is a desperate attempt of the company to secure its survival, claimed a report published by Financial Times.  
Compared to the global market leaders in the cloud computing business such as and Microsoft, and compared to the leaders in this field in China such a Alibaba and Tencent, the cloud computing business unit of the Chinese group lags far behind. Currently this business of Huawei sells computing power and storage to companies which include giving its clients access to AI.
The business however is growing rapidly for the company. Huawei in January, placed this business unit on an equal footing with its smartphones and telecoms equipment businesses.
The cloud business was key to Huawei in stabilizing itself in its domestic market because of increasing support to the company by the Chinese government through cloud contracts for its public companies, said the FT report quoting a person at a Chinese supplier to Huawei.
The unit was stepping up its offerings, the FT report further said quoting a number of people involved in Huawei’s cloud business.
 “We will continue to provide customers with a package of [cloud] services and products,” said a person at Huawei familiar with the strategy, according to the report. “The quality of the chips in it may not be as good as before, but for the other products that are not impacted, we will offer something with a little better quality, and the customers can accept it.”
According to another source quoted in the FT report, the ban by the Trump administration on Huawei effectively meant choking off access to mobile chips for the company which meant that the business outlook for the company’s smartphone and other consumer products unit was “hopeless”. Therefore this change in focus was needed by the company to survive, the source familiar with the business strategies reportedly said.
About half of $122bn revenue generated by Huawei last year was accounted for by the sale of products from its consumer unit.

Christopher J. Mitchell

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