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With the high pressure of sanctions, Huawei is also fighting back step by step.
The latest news shows that Huawei plans to sell part of its submarine cable communication network business under its holding subsidiary. In this regard, some analysts said that Huawei's business adjustments this time may be intended to tighten its grip and divest non-core businesses to better focus on its main business.
At the same time, the IEEE has "lifted the ban" on Huawei, and many countries have expressed support for Huawei. The environment facing Huawei is changing.
1
What is the point of selling the submarine cable communication business?
Recently, the listed company Hengtong Optoelectronics announced that it is planning to purchase Huawei Marine Networks (Hong Kong) held by Huawei Technology Investment Co., Ltd. (hereinafter referred to as "Huawei Investment") by issuing shares and paying cash. ) Co., Ltd. (hereinafter referred to as "Huawei Marine") 51% equity.
The announcement shows that Huawei Investment has signed a "Transaction Letter of Intent" with Hengtong Optoelectronics. Both parties will hire an asset appraisal company with securities and futures qualifications to evaluate Huawei Marine. The final transaction price will be based on the appraisal value. Determined through negotiation between both parties.
Given that the two parties have not yet signed a formal transaction agreement, the specific transaction plan is still under discussion and verification, and there is still a certain degree of uncertainty.
It is worth noting that this is the first time Huawei has sold non-core assets after the United States implemented export controls on Huawei. Hengtong Optoelectronics’ announcement did not mention the specific reasons for Huawei’s sale of its subsidiary’s equity, and Huawei did not disclose the reasons.
Public information shows that Huawei Marine was established in November 2008 and is the world's fourth largest submarine cable engineering company. It is mainly responsible for the laying and maintenance of cables. It is a joint venture established by Huawei and Global Maritime Systems Co., Ltd. Among them, Huawei holds 51% of the shares and provides communication transmission technology to the joint venture, while Global Maritime Systems Co., Ltd. holds 49% of the shares and provides marine construction experience.
(Huawei Marine appears at the "Olympics" of the submarine cable industry - SubOptic2019 picture according to the official website)
Hengtong Optoelectronics focuses on the fields of optical fiber communications and power transmission and is China's first A submarine cable company that has passed international sea trials with a water depth of 5,000 meters. At the ODC 2017 annual meeting, it was ranked among the top three in the global optical fiber communications industry from 2016 to 2017.
In fact, Hengtong Optoelectronics’ acquisition of Huawei Marine is not without purpose. The two have cooperated before.
On October 22, 2018, PEACE International Submarine Cable Network System Co., Ltd. (Hengtong Optoelectronics Company) and Huawei Marine jointly announced that the PEACE submarine cable project has entered the production phase of submarine cables and equipment. The submarine cable project has a total length of 12,000 kilometers, connecting Asia, Africa and Europe, and plans to provide commercial services in the first quarter of 2020.
It should also be noted that according to Huawei's 2018 annual report, as of December 31, 2018, Huawei Marine contributed 394 million yuan in revenue to Huawei and a net profit of 115 million yuan. Huawei Marine's revenue accounted for 0.054% of the total sales revenue for the year.
It can be seen that the revenue from the marine cable business accounts for a very small proportion. Some analysts said that Huawei's sale of the submarine cable business is intended to focus on its core business and will focus on developing its trade focus, namely mobile communication networks and smartphone related businesses. At the same time, Huawei Marine can also be protected from Huawei-related controversies.
Foreign media have previously reported that Huawei Marine Networks is vigorously developing submarine optical cables for network data transmission. It has a high market share and may arouse suspicion from the US government.
Huawei founder Ren Zhengfei once said: "I think products that cannot be strategically leading in the world should exit the life cycle. For strategic exits in the industry, they must exit in an orderly manner."
Once the transaction plan is confirmed, it will mean that Huawei will withdraw from Huawei Ocean, and it will even mean Huawei's strategic adjustment to completely withdraw from the submarine cable market.
2
How effective is the Huawei ban order?
While Huawei is planning to sell its submarine cable business, the general environment has also changed.
IEEE recently issued another statement stating that it will lift restrictions on employees of Huawei and its subsidiaries to participate in peer review and editing work in the IEEE publishing process. The previous restrictive approach was to avoid related legal risks.
Previously, some international technical standardization organizations that had suspended Huawei’s membership began to restore Huawei’s membership. Industry organizations such as the SD Memory Card Association (SDA), WiFi Alliance, Bluetooth Technology Alliance and JEDEC Association (Solid State Technology Association).
Not only in academia, but also in the 5G field, Huawei has also received support from many countries.
In the past few days, leaders or companies from Russia, Spain, Malaysia, the United Kingdom and other countries have supported Huawei.
Among them, on May 30, EE, the UK’s largest telecom operator, took the lead in launching commercial 5G services in parts of six cities including London and Manchester. BBC News Network dispatched three reporting teams to conduct the first live 5G news broadcast in the UK.
(Photo according to Observer.com)
On the same day, Malaysian Prime Minister Mahathir Mohamad said when attending the 25th International Exchange Conference "Future of Asia" in Tokyo, Japan on the 30th that Malaysia We will continue to use Huawei technology as much as possible.
Jin Yong, CEO of Huawei Spain, said on May 29 that despite the US government’s ban on Huawei, the vast majority of Huawei’s partners in Spain have chosen to “side by side” with Huawei during this difficult period. "Combat", Huawei's participation in Spain's 5G network construction will not be affected by the US ban.
According to reports, in Spain, Huawei has signed 5G deployment agreements with a number of telecom operators.
I still remember that when the United States announced a ban on Huawei and the market was worried about the future of Huawei's 5G development, Ren Zhengfei said: "Huawei's 5G will not be affected. In terms of 5G technology, others have been ahead of others for two or three years." We will definitely not be able to catch up with Huawei. We will not easily exclude American chips and will grow together, but if there are supply difficulties, we will have backup.” As CCTV previously reported, Huawei has left. Without suppliers, we cannot do without the international market. We must integrate into the world and grow together. Huawei's interests lie in international cooperation and the international market. We are not isolated from the world and develop together with the world.
Some information comes from Brokerage China and China Business News
Editor | Reviewed by Mei Jing | Jia Qiuhong
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