West bans Russia, Huawei benefits

According to the Financial Times, in recent weeks, Huawei has posted dozens of engineering positions at four research centers in Russia and business development personnel in Moscow. Huawei is seizing this one-of-a-kind opportunity.

(Photo: Bangkok Post)

Its two major rivals – Sweden’s Ericsson and Finland’s Nokia – both pulled out of Russia after the country launched a special military operation in Ukraine on February 24. The war led to a series of severe sanctions from the West and as a result hundreds of global companies had no choice but to stop doing business here. Russians cannot use foreign banks or the SWIFT international payment system.

This caused Russia to rush to patch major holes in the economy. One of them is wireless technology, including the deployment of 5G networks, which lags far behind other countries. The first 5G network is expected to launch early next year. Ericsson and Nokia hold about 40 to 60 percent of Russia’s wireless network equipment market share, with the rest owned by Huawei and ZTE, according to research firm Dell’Oro.

While Huawei gained more than it lost, it was clear that Ericsson and Nokia both lost. Since Russia annexed Crimea in 2014, the two companies have had to apply for an EU license to continue operating in the country. They can do so because high-speed Internet is considered “a free technology”, said Hosuk Lee Makiyama, a telecommunications expert from Brussels. Currently, they are obligated to continue to maintain the telecommunications infrastructure built over the past few years. In theory, they weren’t paid a dime.

Whether Huawei can replace two Western rivals is not an easy question to answer. Under US sanctions, the company is prohibited from using US-origin components. Rotating Chairman Guo Ping said the company is using its microchip stockpile and designing products that don’t need US components. However, former US Commerce Department official Kevin Wolf doubts the ability of Chinese enterprises to exclude all US tools from semiconductors. “I bet it’s impossible,” he told the Financial Times.

In many ways, though, Huawei has been benefiting from Western sanctions against Russia. It’s serving the market that Apple and Samsung left behind. According to the Financial Times, Huawei’s smartphone sales tripled in the first two weeks of March. Although the Apple Store website still listed iPhone 13 for sale, in reality, people couldn’t buy it. In contrast, Huawei’s Russian website has a wide range of products, including the $2,000 P50 high-end smartphone.

Du Lam (According to Fortune)