Huawei Gains Global Telco Market Share Despite Sanctions & Asks Employees For Funds

Sep 8
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Chinese telecommunications giant Huawei Technologies continued to lead the global market for telecommunications equipment in the first half of this year, despite sanctions by the American government and calls for boycotting the company's 5G equipment from officials in Washington. The details come courtesy of a report from the Dell'Oro Group, cited by C114 Communication Network and they show that the company benefited primarily from the resurgence of 5G rollout in China as it garnered a 31% global market share during the six months ending this June.

Huawei's Global Lead In Telecommunications Equipment Widens In First Six Months of 2020

Not only did Huawei lead the global 5G telecommunications equipment market in the first half of this year, but the company also extended its share of the pie over 2019. As-per-the-details, Huawei captured 31% of the telecommunications equipment market in H1 2020, which marked for 3% growth over the company's 28% market share at the end of last year.

This growth came at a time when the overall market resumed its growth after having declined by 4% year-over-year in the first quarter of this year due to pandemic-induced economic disruption. Dell'Oro also reports that the growth during the second quarter was stimulated by the Chinese 5G telecommunications market, with 5G Radio Access Network (RAN), 5G Core, Gigabit Passive Optical Networks (GPON) and carrier Ethernet switches being amongst the areas that led this growth.

The hierarchy of vendor market share maintained its structure during this half, with Finnish company Nokia coming in second place and Ericsson, ZTE and Cisco following in respectively. Within this list, only Nokia's market share remained fixed at its 2019 value of 14% while all other companies saw their share drop.

An overview of the global telecommunications market in H1 2020 courtesy of Dell'Oro Group. Image sourced from C11N.

Huawei Seeks Employee Help for Raising Funds to Let It Deal With U.S. Sanctions

In an interesting turn of events reported by the South China Morning Post, Huawei is now asking its employees to reinvest their income into the company. Employees who have served at Huawei for more than five years will be eligible to purchase 'virtual shares' of the company equalling 25% of their income over the past five years at a price of 7.85 Yuan per share, which is equal to Huawei's asset value at the end of 2019.

The company's ownership structure, as-per publicly reported details is unique in the sense that it is fully owned by its employees. These shares cannot be traded amongst employees, but those willing to cash out can sell them back to Huawei. They are held by a company dubbed Huawei Investment & Holding that owns 99.06 of Huawei's shares.

Employees who have been employed by the company for less than eight years have to sell their shares back to Huawei before leaving, and the proceeds from the shareholding investment go towards funding the company's research and development activities. Employees also take a piece of Huawei's shares back home in the form of dividends that they earn through their shareholding.

This report comes as the company not only boosts its hiring process for bringing more researchers under its fold, but rumors of the company cutting components orders for its gadgets also surface.. The prices of these gadgets have also started to increase as the market reacts to the future unavailability of Kirin processors.

These processors, which were fabricated by the Taiwanese foundry TSMC, will no longer be available to Huawei due to regulations put in place by the United States Department of Commerce. The Department, in an update, made in August restricted the company from procuring components that use American-origin hardware or software for their production. TSMC, which is at the forefront of global chip manufacturing, has confirmed its decision to adhere to these rules and has subsequently left Huawei with little alternatives.

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