Huawei founder Ren Zhengfei announced on Wednesday a reorganization that granted the head of its consumer business group oversight over its car business operations as the company moves to shore up promising new revenue streams.
Why it matters: Huawei is shifting its focus to its budding connected car business following US sanctions which have strangled the company’s smartphone unit by clamping down on its access to chipsets.
- Huawei’s revenue growth rate declined to 9.9% year on year in the first nine months of the year from 18% in 2019, which the company said “basically met expectations.”
- Its global smartphone shipments fell 23% year on year in the third quarter, market research firm Canalys said in a recent report.
Details: Huawei’s Intelligent Automotive Solution business unit was moved under the consumer business managing board, currently led by the group’s CEO Richard Yu, according to an announcement (in Chinese) dated Oct. 26 and posted to its online community on Wednesday.
- Yu will also lead the investment decision-making on the company’s intelligent automotive parts-related business in addition to its consumer device unit, Ren said, adding that the company aims to create more synergies between the two.
- Ren reaffirmed its strategy in the announcement that it has no intention to build cars, but to become a parts and solution provider for the growing segment of intelligent and connected vehicles.
Context: Huawei in May 2019 placed its auto business unit under its information and communication technology (ICT) infrastructure managing board which mainly oversees its carrier and enterprise businesses and is led by rotating chairman Eric Xu.
- The Chinese telecommunications giant has invested heavily in the new potential revenue stream, spending more than $500 million during the first 10 months of this year. The unit had around 4,000 employees as of September, according to a Caixin report (in Chinese).
- The auto unit’s operations had been fragmented prior to the restructuring. On one hand, it develops car components and software solutions such as a power management system and charging solutions for electric cars, Caixin reported citing company employees.
- Meanwhile, the consumer group offers Hicar, a platform similar to Apple’s Car Play for connecting smart devices to vehicles, and the in-vehicle version of its Harmony operating system is jointly developed by the two teams, the sources said.