Navigating Financial Restrictions with Ease: Huawei's Impressive Post-Sanctions Recovery
A Bold Defiance: Huawei's Resilience Amidst US Sanctions
The once daunting US sanctions imposed on Huawei, a Chinese tech giant, seem to have lost their bite. Despite being cut off from American technology and resources, Huawei managed to generate a staggering $118 billion in revenue in 2024 – a remarkable 22% surge over 2023.
The $118 billion might not be as impressive as previous revenue peaks, but it's an undeniable testament to the company's determination to adapt and persist, even in the most challenging circumstances.
Huawei's success story can be attributed to a few key factors:
- Domestic Investment in Chipmaking: Huawei has heavily invested in domestic chip production, reducing its reliance on foreign components.
- Adjusting the Supply Chain: The company has strategically diversified its supply chains by partnering with non-US suppliers, ensuring continuity in the face of US sanctions.
- Strong Domestic Demand: The Chinese market, with its colossal size, has been the backbone of Huawei's growth during this tough period.
Huawei's smartphone division, with devices boasting homegrown chipsets, secured a 16% share of China's smartphone market and even surpassed Apple in domestic sales. The Mate 60 smartphone, powered by a China-made 7nm chip, may not rival 3nm Snapdragons or Apple chips, but it demonstrates Huawei's capacity to innovate without US technology.
Huawei's smart car solutions unit also played a crucial role in revenue growth. The unit collaborated with Chinese automakers to provide advanced technology for electric vehicles, with a focus on autonomous driving software, in-car operating systems, and next-generation chip technology.
Huawei also made strides in AI technology, integrating DeepSeek's R1 language model into its cloud service, and developing the Ascend 910C chip, which performs at about 60% of Nvidia's H100 GPU in specific tasks. Even though it's not yet comparable to US technology, it's enough to keep Huawei moving forward.
The Rising Dragon: China's Technological Advancements
Huawei's success story is far from an isolated incident. Chinese companies, in general, are finding ways to circumnavigate US tech restrictions, employing a variety of strategies:
- Indigenous Technology Development: Faced with limited access to foreign components, Chinese companies are investing massively in research and development, creating their own alternatives.
- Strategic Partnerships: Chinese companies are forming alliances with non-US suppliers, diversifying their supply chains and reducing dependence on American technology.
- Focus on the Domestic Market: With a massive domestic market, Chinese companies can maintain growth even without significant international expansion.
- State Support: The Chinese government supports strategic industries financially and with policies, enabling them to overcome obstacles posed by sanctions.
DeepSeek, a Chinese AI research company, serves as a perfect example of this trend. Despite supposedly relying on North American technology, DeepSeek has reportedly made advancements in large language models without using US-developed GPUs, indicating a growing capability within China to innovate independently.
There have been rumors concerning DeepSeek's access to thousands of Nvidia chips, which could potentially be a violation of export controls. However, regardless of whether these rumors are true or not, it's clear that Chinese companies are finding ways to work around sanctions.
Sanctions: A Question of Leadership and Resourcefulness
The resilience of Chinese companies raises questions about the potency of sanctions as a tool of economic warfare and highlights the growing technological prowess of China. This situation also calls into question the validity of arguments that attribute Zimbabwe's economic struggles to sanctions alone.
Even if sanctions are responsible for some of Zimbabwe's challenges, it's still a matter of poor leadership and an inability to set the economy up for success in spite of sanctions. Consequently, if other countries, like China, can thrive under even stiffer sanctions, it's clear that Zimbabwe has no excuse for its economic woes.
In the face of US sanctions, Huawei leveraged domestic investment in chipmaking, strategic diversification of supply chains, and a robust domestic demand to secure a 16% share of China's smartphone market and surpass Apple in domestic sales, demonstrating their innovation capabilities without relying on US technology, even in the wearable tech realm. Simultaneously, Chinese AI research company DeepSeek made advancements in large language models without using US-developed GPUs, showcasing the potential for independent innovation in China's technological sector.
