This article comes from WeChat WeChat official account:Alphabet list (id: wujicaijing), Author: Zhao Jinjie, brother Yu, title map from: vision china.
The three-year contract of not building a car is about to expire. Just as the outside world is speculating about when Huawei brand cars will be unveiled, Ren Zhengfei stood up and made a final decision: "In the next five years, Huawei will not build a car."
Xu Zhijun, the rotating chairman, confirmed this at the press conference of Huawei’s 2022 annual report on March 31, saying that the five-year period is because the longest validity period of all Huawei documents is only five years."After the five-year deadline has arrived, we will send another five years."
"Huawei’s strategy has not changed. We don’t build cars, help car companies build good cars, and become an incremental component supplier of intelligent networked electric vehicles." Regarding the replacement of Huawei’s brand, Xu Zhijun said, "Some of our departments or some individuals or some partners are abusing Huawei’s brand, and Huawei has been investigating."
In order to prevent Huawei’s brand influence, which has been built for more than 30 years, from being abused, Ren Zhengfei clearly stipulated in the document that Huawei logo can’t be used in combination with automobile trademarks, and "Huawei asks the world" and "HUAWEI AITO" are prohibited. "Huawei is starting to clean up and rectify flagship stores, sales stores and promotional materials that do not meet the requirements." Xu Zhijun said.
This is undoubtedly a blow to Yu Chengdong who wants to lead the radical development of automobile business through Huawei Eco-car. At the launch conference of Huawei P60 series a week ago, Yu Chengdong was still promoting the upcoming M5 advanced intelligent driving version with the help of the brand influence of "Huawei Jiejie".
On March 8 this year, under the leadership of Yu Chengdong, "AITO asking the world" was officially changed to "HUAWEI asking the world", which was regarded by the outside world as an important signal for Huawei to strengthen its leading position in the automobile business.
In the planning of Yu Chengdong, Huawei is the brand of "Huawei Eco-car". By uniting a number of car companies to build eco-alliances belonging to different price segments, Yu Chengdong hopes that Huawei’s auto business will be profitable in 2025.
It is worth noting that in February this year, in the poster released by AITO official blog, the logo was once changed from AITO to HUAWEI, and the external publicity speech was also changed from "Huawei’s deep empowerment" to "Huawei’s overall leadership".
This is not the first time that Ren Zhengfei has "stepped on the brakes" for Huawei’s auto business.
In 2018, after Huawei held its annual strategy meeting in Sanya, Hainan, and decided to "not build cars, but help car companies build good cars", the voice of wanting to build cars was still filled inside. At that time, Xu Zhijun, the rotating chairman of Huawei, was considered as the key to promote Huawei’s smart car BU from scratch. According to the news from the media science and technology forces, Xu Zhijun has been pushing Huawei to enter the automotive field, and even made no secret of his conflict with other executives and even Ren Zhengfei.
One month after Huawei BU was handed over to Yu Chengdong in October 2019, Ren Zhengfei issued the document "Resolution on the Management of Smart Car Parts Business", which made it clear that "whoever proposes to build a car in the future and interferes with the company can be transferred from his post and find another post", and gave a three-year ban period.
In July, 2021, Xu Zhijun revealed that only Yu Chengdong in Huawei was still unconvinced and still wanted to build a car. "But he only had one vote. For Huawei’s senior team, it is clear what to do and what not to do in the survival stage. "
Apart from stopping Yu Chengdong’s radical move, Huawei’s financial difficulties may also be one of the reasons why Ren Zhengfei is unwilling to build more cars.
The financial report shows that Huawei’s revenue in 2022 was 642.3 billion yuan, a year-on-year increase of only 0.9%, and its net profit fell to 35.6 billion yuan, a year-on-year plunge of 68.7%.
Figure/Huawei Financial Report
"In 2023 and for a long time to come, sustainable survival and development will be the core proposition of Huawei’s strategy." Xu Zhijun said.
one
Huawei’s overall revenue is reaching a bottleneck. Since 2017, the growth of the carrier business that started from it has stagnated, with the year-on-year growth rate hovering between -4.03% and 3.8%. In 2022, Huawei achieved sales revenue of 284 billion yuan in the field of operator business, with a year-on-year increase of only 0.9%, which was basically the same.
The terminal business achieved a sales revenue of 214.5 billion yuan in 2022, down 11.9% year-on-year.
The only Huawei enterprise business that can be called substantial growth achieved sales revenue of 133.2 billion yuan, up 30.1% year-on-year, but it only accounted for 20.7% of the total revenue, and it has not yet become a new pillar to support Huawei’s stable development.
Faced with the slowdown of Huawei’s revenue growth, Ren Zhengfei gave an early warning as early as last August, and issued a document entitled "The management policy of the whole company should shift from the pursuit of scale to the pursuit of profit and cash flow", saying that based on the prediction that the global economy will continue to decline in the next decade, it is required to reduce or close those businesses that cannot generate value and profit, and link the promotion and upgrading of bonuses with the operating results, shouting the slogan "Let the chill pass to everyone".
As the only business that Huawei is still losing money, BU, led by Yu Chengdong, bears the brunt.According to the spirit of Ren Zhengfei’s instructions in the document, Huawei’s automobile business will no longer pursue a complete front, reduce the research budget, but also strengthen the closed-loop business and focus on several key components to make competitiveness.
For Ren Zhengfei’s series of adjustment measures, Wu Jianguo, former vice president of Huawei’s human resources, told the alphabet list that the weakening of the global consumer side will inevitably lead to the extension of Huawei’s cycle of coming back to life, which also means that Huawei needs to make greater adjustments than responding to the US crackdown. "(before 2022)It’s not so clear, but now it’s finally guaranteed.(The trend of economic recession)Ren Zhengfei dared to clearly stand up and adjust the strategy. "
Although Car BU is still regarded by Ren Zhengfei as a core project that can maintain strategic investment, under the guidance of the highest policy of bidding farewell to scale growth and turning to profit creation, Huawei’s automobile business obviously can no longer simply change scale with losses, and Yu Chengdong needs to find a balance between growth and making money.
What’s more, from the reality of the development of new car-making forces, except Tesla, the second new car-making company that can achieve annual profit has not yet been born in the world. Even Tesla has experienced high-intensity capital investment for more than ten years. Short-term high losses caused by going off to build a car in person, bothContrary to the pursuit of profit advocated by Ren Zhengfei, it is not allowed by Huawei’s current revenue reality..
two
If we continue to concentrate on building cars, more and more car companies may be wary of Huawei and choose to escape from Huawei.
GAC has become another car company that announced its "breakup" with Huawei.. On the evening of March 27th, Guangzhou Automobile Group announced that the company’s holding subsidiary Guangzhou Automobile Ai ‘an AH8 project was changed from joint development with Huawei to independent development.
This also means that since the two sides reached a joint car-building agreement in 2021, Huawei’s role has changed from the Huawei Inside model of deep cooperation to the most basic component supplier model.
Guangzhou Automobile Ai ‘an’s dissatisfaction with Huawei has long been traceable. At the 19th China Automobile Marketing Summit in August last year, Xiao Yong, deputy general manager of GAC Ai ‘an, once spoke out: "It may not only be batteries, but Huawei is also a big-name supplier, and its price is relatively high and uncontrolled. If we want to cooperate with Huawei, we will find that there is basically no bargaining power."
Xiao Yong said that while maintaining cooperation with Huawei, Guangzhou Automobile is carrying out self-research on battery technology and building a battery factory, and is striving to build a self-research system in terms of core technologies, domain controllers and intelligent cockpits. "Walking on two legs … In the future, 30% of Aeon will conduct self-research and 70% will choose market procurement and cooperation".
There is also SAIC that is far away from Huawei because of fear of losing its dominance.Chen Hong, the chairman of SAIC, who doesn’t want Huawei to be its "soul", made it clear at the 2021 shareholders’ meeting that SAIC can’t accept the overall solution of any supplier, and at most, it will maintain a cooperative relationship.
Even in the eyes of the outside world, Cyrus, which maintains the closest relationship with Huawei, has also started to stand on its own feet.
According to the interface report, Huawei has the initiative in three aspects: all closed-loop data, calibration of important vehicle parameters and main sales channels. The car data related to the world will be uploaded to Huawei first, and Celeste will have to ask Huawei for the demand first if necessary.
In order to enhance the control of data, Cyrus began to set up its own relevant team to collect and analyze data.
On March 30th, Chongqing Sailisi Landian Automobile Co., Ltd., a subsidiary of Sailisi Group, officially released a brand-new new energy vehicle brand-Landian, and launched its first product, Landian E5, which no longer uses Huawei’s electric drive platform and HarmonyOS cockpit.
Instead, it is BYD’s Foday electric hybrid scheme, including 1.5L high-efficiency plug-in special engine and DHT300 electric hybrid system. On the car plane, only HUAWEI HiCar 3.0 is supported, and the HarmonyOS cockpit, which Huawei prides itself on, is no longer adopted by Cyrus.
Obviously, unlike the pursuit of "Chinese content" by the brand in the world, the brand of Blue Power cultivated by Cyrus itself is "going to Huawei".
According to an insider of Celestial, "the sales revenue of the brand in the world is incorporated into the financial report of Celestial listed companies, and Huawei is divided according to the supplier model. Although it seems that Huawei’s participation is very high, in fact, the sharing model is completely based on suppliers. " According to the previously released financial report, in 2022, Sailis expects to achieve a net loss of about 3.5 billion to 3.95 billion yuan, which is significantly larger than the loss of 1.824 billion yuan in the same period of last year, showing a situation of no increase in income.
The more you sell, the more you lose. It is precisely because in the process of cooperation with Huawei, Cyrus has invested excessive funds in R&D and manufacturing. This level of investment exceeds the traditional "foundry model". The bottomless investment makes the cooperation model between Cyrus and Huawei difficult to be copied for a time. The above-mentioned Celeste insiders revealed, "For Huawei, I definitely hope that like Celeste, I can work and actively cooperate, and I am willing to spend more and more money."
In addition, the current sales decline of the car industry has made the car companies waiting to see more hesitant. In December last year, the car industry was able to sell 10,134 cars, but in January this year, it dropped to 4,475 cars by diving. I thought this was affected by the Spring Festival holiday, but in February, the sales volume of the car industry further fell to 3,505 cars. According to insiders of Sailis, "HUAWEI recently changed AITO to Huawei. In fact, there is also a lot of sales pressure. This year, the whole situation has changed a little.(Huawei)Sales can’t go up, and we can’t even talk about going out for negotiations. "
After basically bidding farewell to the orders of new forces such as "Wei Xiaoli", it is obviously more important for Huawei BU, which is determined to be "Bosch" in the new energy era, to make a clear declaration of not making cars, and to win more high-quality cooperation from traditional car companies by dispelling the doubts of partners.
three
Compared with overweight automobile business, it is undoubtedly more urgent and important to maintain the stability of Huawei’s existing business.
Since it was included in the "Entity List" in May 2019, the United States has continuously stepped up its pressure on China enterprises including Huawei: in August 2022, the US Department of Commerce burned EDA software, ultra-wide band-gap semiconductor materials and pressure gain.（PGC）And other four technologies to implement new export controls; At the end of January this year, the United States reached an agreement with the Netherlands and Japan to restrict the export of advanced chip manufacturing equipment to China, further suppressing China’s chip industry chain; In February, Bloomberg, Reuters, etc. broke the news again that the US government is considering cutting off all contacts between American suppliers and Huawei, and stopping issuing licenses of key chip manufacturers such as Intel and Qualcomm, such as 4G, Wi-Fi 6/Wi-Fi 7, artificial intelligence, high-performance computing and cloud projects.
Once these measures are implemented, Huawei will completely cut off the supply from the part before 2023. In addition to the unsustainable development of Huawei’s terminal services such as mobile phones and notebooks, the high-order intelligent driving solution ADS, which is the mainstay of Huawei’s Hi model, will also lose its competitive advantage in the industry because it cannot obtain sustained and stable high-computing chips.
In order to break the technical blockade, Huawei launched a domestic alternative development campaign around three R&D production lines of hardware, software and chip development.
Combined with the recent speeches made by Ren Zhengfei and Xu Zhijun, Huawei has successively completed ERP.(Enterprise Resource Management)Software, and localization of EDA tools above 14nm.
"We completed the replacement development of 13,000+devices and the repeated board replacement development of 4,000+circuit boards in three years … until now, our circuit boards have stabilized because we have domestic parts." Ren Zhengfei said.
However, at the annual report conference on March 31, Xu Zhijun corrected the above information, saying that it was not three years, but it actually took Huawei nearly 10 years to complete some replacement work.
But for Huawei, which wants to return to the leading position in the industry, these alternatives are far from enough.Taking chips as an example, Apple, Samsung, etc. are already matching the 4nm process. For Huawei, which has just broken through the 14nm EDA tool, there are still many key process nodes such as 10nm, 7nm, 5nm, etc., and the smaller the process, the greater the R&D investment resources it consumes.
As Xu Zhijun said, "Although we have made a lot of breakthroughs in product development tools in recent years, we still face many challenges, and there are many product development tools that have not completely broken through, which requires us to work non-stop and redouble our efforts."
The self-developed software business has become one of Huawei’s key breakthrough directions in 2023.
However, Car BU, which was originally born to make up for the deficit caused by the decline of mobile phone business, is still the most promising sector for Huawei to become a new growth point at present, under the circumstance that Huawei’s two revenue pillar terminals BG and operator BG either have a decline in revenue or their revenue reaches a bottleneck.
This may also be the reason why Ren Zhengfei did not directly announce that he would never build a car. After waiting for five years, Huawei solved the problem of localization substitution in the field of software and hardware, and it may not be impossible to put the car on the table in person.
This article comes from WeChat WeChat official account:Alphabet list (id: wujicaijing)Author: Zhao Jinjie, Senior Brother Yu