Huawei’s Yu handed reins to cloud and AI unit

Richard Yu, the man who turned Huawei into a company that designed and made phones into one of the world’s top smartphone vendors, has a new challenge.

The 51-year-old Yu, who has been at Huawei for nearly three decades, has been selected to also lead the company’s young cloud and artificial intelligence unit, a source with direct knowledge of the matter told CNBC, just as the handset division faces an uncertain future.

The executive, who has been at Huawei for nearly three decades and helped dethrone smartphone giant Samsung, will start his post as head of the cloud and AI business on Feb. 7, the source said.

Huawei’s handset business has been in decline due to US sanctions. Neither Huawei nor Yu was immediately available for comment.

Moving a successful veteran to this business unit, which was created last year, highlights the areas where Huawei sees its future as some of its businesses, in particular smartphones, continue to feel the heat from US pressure, CNBC reported.

“Richard has a proven track record in Huawei from various posts. I believe there will be greater synergy between smartphones and cloud computing with him onboard with additional responsibility,” said the source.

According to the South China Morning Post, Huawei Cloud had a 16.2% share of China’s cloud services market in the third quarter, behind the 40.9% share of industry leader Alibaba Group Holding’s cloud unit, according to research firm Canalys.

Within the APAC (Asia Pacific) region, China accounts for almost a third of the public cloud market and is more than twice the size of Japan, the second-largest market, according to Data Center Dynamics.

The next biggest markets by country in APAC are India, South Korea, Australia, Hong Kong, and Singapore.

“China remains a unique cloud market that is totally dominated by local companies. Beyond China every major country market is led by Amazon and Microsoft,” said John Dinsdale, a chief analyst and research director at Synergy Research Group.

“Putting China to one side, this speaks to the truly global nature of the cloud market. To become one of the leaders requires a global presence, technology smarts, a brand name that plays well in all countries, extremely deep pockets, a long-term focus and total commitment from senior management.”

Yu’s appointment comes at a time of flux for Huawei.

He will be tasked with deciding what comes next for Huawei’s smartphone business but also with trying to turn the company into a cloud computing and artificial intelligence giant, competing with rivals such as Alibaba, Tencent and Baidu, CNBC reported.

Under the Trump administration, Huawei was labeled a national security threat.

Washington alleged the company’s networking equipment could be used by Beijing to spy on Americans. Huawei repeatedly denied allegations that it poses a national security threat.

But Washington hit the company with a number of sanctions.

In 2019, Huawei was put on a US blacklist called the Entity List, which restricted American firms from exporting certain software and components to the company, CNBC reported.

This led to Google cutting ties and stopping Huawei from using a licensed version of its Android mobile operating system.

The US also moved to cut Huawei off from key chip supplies.

As a result, Huawei has seen its smartphone market share plunge outside of China, effectively slowing its growing business. Huawei’s consumer division, which includes smartphones, was its biggest by revenue in 2019.

Meanwhile, Huawei’s US sanctions will be reviewed under President Biden’s Commerce pick, Android Authority reported.

When asked if she would keep Huawei on the economic blacklist, Rhode Island governor and Commerce nominee Gina Raimondo told Reuters that she would “review the policy, consult with you, consult with industry, consult with our allies and make an assessment as to what’s best for American national and economic security.”

The answer suggests that the Biden administration — which has replaced the often irrational and unhinged economic policies of President Trump — is reportedly open to removing Huawei from the Entity List or making other changes in the Chinese brand’s favor.

Nevertheless, Raimondo has yet to be confirmed as the Commerce chief. It’s also worth noting that the administration could ultimately opt to maintain the status quo following a review of the situation.

Huawei was forced to sell off its budget smartphone brand Honor in November in order for that to survive, though it is no longer owned by the Chinese tech giant, CNBC reported.

And on Monday, Reuters reported that Huawei is in talks to sell its premium Mate and P brands of smartphones. Huawei said there “is no merit to these rumors” and that it remains “fully committed” to the smartphone business.