A man walks past a Huawei company logo outside the entrance of a Huawei office in Wuhan, Hubei province. Picture: REUTERS
A man walks past a Huawei company logo outside the entrance of a Huawei office in Wuhan, Hubei province. Picture: REUTERS

Chinese Telecoms giant Huawei has shown its intentions in the wider technology industry by unveiling its own processors with artificial intelligence (AI) technology built in, as it seeks to expand its cloud and enterprise businesses.

At the Huawei Connect conference in Shanghai this month, rotating chair Eric Xu showed off the company’s two new Ascend AI chips and predicted that "AI will change all industries".

Huawei announced a "full stack portfolio" of chips and services, which will operate in data centres (the Ascend 910 chip, which Huawei says "has the world’s greatest computing density in a single chip") and an upgrade to its Kirin 970 AI chip for smartphones. This was used in last year’s Mate 10, the first mobile to have AI built in, it claimed at the time. The upgraded Kirin 980 is the brains in its Mate 20 flagship device, launched in London last week. Xu said: "AI will change jobs and skills in a way that is quite different from the previous revolutions."

While these revolutions created a demand for repetitive routine tasks (working in factories or in supply chains and on assembly lines), he believes AI will "greatly boost automation in almost all aspects of an organisation".

With less demand for repetitive, routine task-oriented jobs, he expects a rise in data science employment — but these will still be fewer than the automation jobs they will replace.

"We need to think of new ways to prepare our businesses and industries for change," Xu said. "Every one of us needs to ask ourselves, how will AI reshape or even disrupt the industry I’m working in?"

To date AI has had a lukewarm reception, he said, with only 4% of enterprises having invested in or deployed AI. But a sign of rapid change was that in 2017 more than 22 countries announced a national AI plan, there was $24bn in AI-related mergers and acquisitions, and $14bn in venture capital investments in AI.

These new processors come against the backdrop of an escalating trade war between US President Donald Trump and China, as well as bans on Chinese tech firms. Earlier this year Huawei was blacklisted from the US by law-enforcement agencies just days before it was due to announce deals to sell its smartphones and other telecoms hardware. Another telecoms maker, ZTE, was banned for selling products to Iran.

The Chinese government is pushing for Chinese-made processors to be used in 40% of smartphones in its local market by 2025, as part of its Made in China 2025 programme. This is likely to pit Huawei and other Chinese tech companies against the chip-making establishment firms of Intel, Qualcomm, AMD and Nvidia.

In the second quarter Huawei overtook Apple for the first time to become the world’s second-largest smartphone vendor.

Its high-end smartphones have topped Stuff magazine’s camera tests since the P20 Pro was launched earlier this year.

Analysts at last week’s conference were impressed by Huawei’s new offerings.

"Huawei has created a hardware solution that has AI built directly into the operating system, so it is truly AI at the hardware level," Craig Brown, chief information officer of Enterprise Integration, tells the FM.

"What you have with AI-infused technology is hardware that can process the data in real time, gain insights in real time and allow for decisions to be made in real time."

But, he warns, this is just a capability. "These insights and decisions are only as good as the data. Right now enterprise’s struggle is innovating the data into a data-driven solution to utilise the AI-infused technology."

Will Townsend, a senior analyst at Moor Insights & Strategy, says Huawei is "breaking the Chinese corporate mould" and is no longer a "copycat and fast follower of others in the markets it serves.

"Huawei’s portfolio diversity and differentiation is fast approaching that of Samsung as it continues to innovate in all three of its core business units: consumer, enterprise, and service provider. It’s at the forefront of all three, boasting the first triple camera lens-enabled P20 smartphone, 5G NR infrastructure and now AI."

He thinks "Huawei’s AI use case approach to the market is best summed up as ‘smart connectivity’. Huawei highlighted a number of applications in manufacturing, driving, smart cities, media, health care, financial services and logistics. They are all powerful, but I believe traffic management will be the most transformative."

Huawei is already the largest provider of telecoms equipment in the world and says it services about a third of all people who go online. It prides itself on its research and development. About 79,000 of its employees — or more than 45% of its global workforce — are involved in R&D. Last year it spent $13.23bn on R&D, and plans to increase its annual spending to between $15bn and $20bn, a spokesperson tells the FM.

Its total revenue for the 2017 financial year was $92.5bn, of which $8.6bn was operating profit and net profit was $7.2bn. Its operating margin was 9.3%.

Asked if the telecoms and phonemaker has it sights set on any particular competitor, Qiu Heng, president of marketing for Huawei’s enterprise business group, says: "We don’t think about competition, we think about how to match solutions to customers."

One of Huawei’s strategies with new business units is to "transfer experienced people to new divisions", including himself, he tells the FM. It’s a clever strategy to make sure experienced hands are driving the new operations.