Huawei announced last week changes to its organizational structure and management team, creating a fourth business group for its cloud computing and artificial intelligence (AI) divisions in a sign that the telecommunications giant is priming to ramp up its efforts in this sector.

Why it matters: The changes echo Huawei’s “Cloud Only” strategy announced (in Chinese) in April, in which the company pledged to invest more resources and funds to build a “full-stack cloud platform.”

  • The world’s largest telecom equipment maker and second-largest smartphone vendor is actively opening up new business lines amid US trade sanctions and backlash.
  • A focus on cloud computing puts Huawei in direct competition with the biggest Chinese players including Alibaba and Tencent, as well as global heavyweights such as Amazon and Google.

“The future of computing is a massive market worth more than two trillion US dollars. We’ll keep investing with a strategy that focuses on four key areas. We will push the boundaries of architecture, invest in processors for all scenarios, keep clear business boundaries, and build an open ecosystem.”

— Ken Hu, Huawei deputy chairman, in a company statement from September

Details: Huawei appointed Hou Jinlong president for the cloud computing and AI business group, the company confirmed to TechNode on Tuesday. Finance news outlet Yicai first reported the news, citing an internal company document. Hou had previously led the same team, but his title had been president of the business unit.

  • The changes signify the cloud computing and AI divisions have become Huawei’s fourth business group following its carrier, consumer, and enterprise businesses, meaning the segment will gain more resources and support from the company, according to the report.
  • The changes are a “significant transformation” to Huawei’s information and communications technology (ICT) segment and a “step further to implement Huawei’s Cloud Only strategy,” the Yicai report cited an anonymous Huawei employee as saying.

Context: Huawei Deputy Chairman Ken Hu said in September that the company would invest $1.5 billion over the following five years to attract developers to work in its cloud platform.

  • Combined revenue for Huawei carrier, enterprise, and consumer business in the first half of 2019 was RMB 398.9 billion, accounting for 99.4% of its total revenue in the period.
  • The company expects revenue in 2019 to jump 18% year on year and reach RMB 850 billion (around $123.3 billion).

Wei Sheng

Writing about semiconductors and telecommunications.

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