Job losses on the way as Chinese tech giant reduces networking kit operation.
Update: 09/09/20, 12.30pm: Huawei confirms 20 jobs are at risk under the plans
Huawei says it is pressing ahead with plans for a major new UK R&D centre after revealing it is scaling back its enterprise tech operation here and making redundancies.
The Chinese tech giant is set to stop supplying networking kit such as servers and networking switches to UK customers.
Up to 20 jobs are at risk as part of the changes, which follow the decision by the UK Government to ban Huawei equipment from the country’s 5G network, a move prompted by pressure from US officials including President Donald Trump, who consider the company a security threat due to its close links to the Chinese Government.
Trump has blocked US firms from trading with Huawei, and this morning reports from South Korea suggest Samsung has become the latest company to stop supplying Huawei with parts.
Delivering Fewer Products (But in a Better Way)
Huawei has big investment plans for the UK, and earlier this year was granted planning permission to build an R&D campus just outside Cambridge. Costing around £1 billion. the nine-acre site will be the global HQ for the company’s optoelectronics business, and house 400 jobs.
Despite sounding the retreat on enterprise tech and being added to the UK’s 5G blacklist, a Huawei spokesman said plans for the Cambridge site are unchanged.
On the Huawei job cuts, he explained: “Our enterprise business is to focus its operations in the UK in order to deliver fewer products in a better way. Unfortunately this means a number of roles are no longer required, however we hope to reposition colleagues who are affected elsewhere within the business.”
The spokesman added that the company will continue to provide support for existing customers “for the life cycle of their products”.
Chips in Short Supply
Samsung will stop providing Huawei with parts for its smartphones from September 15, the day tighter controls on the business are introduced by the US Government.
The new sanctions will prohibit non-American companies from selling components to they developed using equipment or software made in the US to Huawei.
Another South Korean company, memory manufacturer SK Hynix, is apparently following suit. The duo are the latest businesses to suspend dealings with Huawei after Taiwanese chip manufacturer TSMC confirmed in May it was no longer processing new orders.
As a result, Huawei’s best hope of securing semiconductors appears to be Chinese manufacturer SMIC, though it could also face a ban from the US Government.
The Price of Keeping Trump Happy: £18.2 Billion?
While banning Huawei from UK 5G networks is likely to curry favour with the US as discussions over a post-Brexit trade deal continue, it comes at a hefty price according to new research.
A study released today and carried out on behalf of Huawei –which it hardly needs saying, has skin in this game — suggests the ban will cost the UK economy £18.2 billion over the next decade.
Assembly, the researchers that put together the report, make some assumptions based on figures from the UK Government, which says the Huawei ban is likely to delay 5G roll-out by two-three years as new suppliers are secured and equipment is removed from the network and replaced. At the time of the decision, culture secretary Oliver Dowden has confirmed that this alone is likely to cost £2 billion.
Using the Government’s estimation that 5G will be worth £164 billion to the UK over the next ten years, the report claims an initial three-year delay will see us down £18.2 billion. The majority of this shortfall, some £10 billion, will be as a result of lost productivity, with mobile operators also suffering to the tune of £4.7 billion.
Commenting on the findings, Matthew Howett, principal analyst and founder of Assembly, said: “As a result of further restrictions on Huawei in the US, the UK mobile operators are set to incur billions of pounds worth of cost stripping out equipment form their networks. This report reaffirms there is also an untold cost in terms of the economy and impact on productivity a delayed 5G roll out will have, the scale of which the UK can ill afford given the current economic circumstances.”