Huawei wins lion's share of China Mobile's 5G base station contracts, in much needed boost to revenue
Huawei Technologies will supply over half of the 5G base stations for China's top telecoms company China Mobile between 2023 and 2024, a deal which analysts say will help shore up its core revenue base after losing its lucrative smartphone business amid tough US sanctions.
Huawei secured 52 per cent of China Mobile's 5G base station work, the largest portion of the contracts put out for tender this year. The deal would involve the sale of 45,426 5G base stations worth about 4.1 billion yuan (US$574 million), according to calculations by the South China Morning Post using bid details published by China Mobile.
Huawei's crosstown rival ZTE was the second-largest winner, accounting for about 26 per cent of the contracts awarded, equivalent to sales of 23,227 5G base stations. Chinese company Datang, Finland's Nokia and Sweden's Ericsson were the remaining successful bidders.
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The successful firms were announced last Friday, about a month after China Mobile solicited equipment suppliers to bid for two contracts for the installation of a total of 86,980 5G base stations between 2023 and 2024, adding to China's existing 5G network, considered the world's largest. The China Mobile tender represents the biggest 5G base station contracts awarded this year.
The China Mobile 5G win would be a boon for the Chinese tech champion, whose revenue growth has lost steam in recent years after the US restricted its access to advanced semiconductors, said Yang Guang, a senior principal telecoms analyst at research firm Omdia.
China's state-run telecoms companies have been an important revenue source for Huawei, which was founded in Shenzhen in 1987 by Ren Zhengfei, initially to sell telephone exchange switches.
The China Mobile 5G win would be a boon for Huawei, whose revenue growth has lost steam in recent years after the US restricted its access to advanced semiconductors. Photo: Handout alt=The China Mobile 5G win would be a boon for Huawei, whose revenue growth has lost steam in recent years after the US restricted its access to advanced semiconductors. Photo: Handout>
Washington has barred Huawei from purchasing off-the-shelf advanced semiconductors or using wafer foundry services to make them, citing national security grounds, dealing a heavy blow to its once lucrative handset business. Last year, revenue from Huawei's consumer business, which includes smartphones and other consumer electronics, declined 11.9 per cent year on year to 214.5 billion yuan.
Sales from its carrier business grew a marginal 0.9 per cent to 284 billion yuan. Privately-held Huawei reported a total of 642.3 billion yuan in sales for the full year 2022, representing slim 0.9 per cent growth from 636.8 billion yuan in 2021.
After a 5G buildout frenzy over the past four years, "China's 5G infrastructure development has already slowed and passed its peak", Yang said. "So in the long run, Huawei still has to find a way to solve its predicament in semiconductors."
China has installed a total of 2.38 million base stations as of the end of February, according to official government figures.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.
