In May, the US added Chinese telecom giant Huawei to its Entity List, a move that blocks the company from buying the US-made chips it relies heavily on for its products as well as forcing US companies to cut ties with the firm. Meanwhile, the US is mobilizing allies to place similar restrictions on Huawei.
During what seems like the most difficult time for Huawei, Xu Wenwei, or William Xu, a member of Huawei’s board and president of the company’s Institute of Strategic Research, told NewsChina that Huawei’s employees have been more driven and united since US relations soured.
Xu is a Huawei employee of 28 years who has worked on strategic planning and prospective research, including microchip technology. In 2004, he was the first president of HiSilicon, Huawei’s chip firm, which was highlighted among the US sanctions. Looking back, Xu said the decision to start HiSilicon as a “backup” was visionary at the time.
The company’s foresight was again demonstrated in the Institute of Strategic Research’s opening at the end of 2018, which was not made public until April. The institute aims to conduct research in collaboration with institutions and universities. “We established it on the initiative of Ren Zhengfei (CEO of Huawei) and will take charge of Huawei’s R&D tech goals for the next five to 10 years,” Xu said.
Huawei’s R&D investment took 15 percent of its revenue in 2018, about 4.5-5 percent of the total R&D input of the country, and resulted in 10 percent of China’s total patents in the year, according to Xu. As president of the institute, Xu shared with NewsChina in an exclusive interview his views on the impacts US sanctions are having on industry and Huawei’s plans for research and cooperation with universities.
NewsChina: How did HiSilicon come about as a backup? Xu Wenwei: It started seven or eight years ago, even earlier. We didn’t call it a backup then. It was actually an effort to make breakthroughs in some core technologies ahead of schedule.
NC: Will Huawei become self-sufficient in chip technology?
XW: Even though we can make some chips on our own, we will use a lot of chips from third parties, including those from the US. Take chips for mobile phones. We have our own Kirin chip but also use Qualcomm chips to balance the industrial chain. We should integrate with the world instead of becoming isolated from it.
NC: What have been the impacts of US sanctions? XW: This move by the US has had a very negative impact on the industry. In the era of globalization, all countries are working interdependently, with each doing different things to supplement the supply chain. A fair ecology of division of labor has formed naturally in the long-term competition between China and the US, for example. Now the US’s unjustified halt of supply forces China and other countries to think about the security of supply and be concerned more about the health and safety of the industrial chain.
NC: Why did Huawei establish the Institute of Strategic Research? XW: Huawei has emphasized innovation from the beginning. Its rapid growth over the past 30 years relied on innovation, which includes innovative solutions to meet customer demand and engineering and technology innovation based on current basic theory and technology [known as Innovation 1.0].
But now we’re facing some bottlenecks, namely a lack of new breakthroughs in basic theory, such as Shannon’s Law, a theorem for encoding digital information, and shortages of new inventions in basic technology. The current innovations are not inventions but improvements on existing basic theories and technologies. This lack of new inventions will restrain future development of the ICT (information and communications technology) industry.
Ren Zhengfei pointed out in 2017 that Huawei’s innovations remain at the level of engineering mathematics and physical algorithms, and the way forward is unclear. How can Huawei break these bottlenecks? Now that Huawei has taken an unprecedented leading position, it means we need to turn from innovation to invention.
The Institute of Strategic Research aims to make overall plans in technological research in the next five to 10 years. It means Huawei is moving toward Innovation 2.0 and will pay more attention to research and invention of basic technologies and theoretical breakthroughs. The focus will shift from previous customer-oriented innovations to research of basic theories and invention of basic technologies. But it will take a long time.
NC: How will the institute carry out basic research?
XW: The idea is to cooperate with universities at the cutting edge of scientific research. Enterprises and universities could supplement each other and share their resources. While universities might not be clear about what enterprises can achieve and the toughest problems they face, we could share the challenges in the industry by providing them with funding to support long-term research.
The research of basic technologies and theory depends on universities or labs in scientific research institutes. Enterprises are, after all, driven by commercial success. Why are so many foreign companies now lagging? Because they mostly pursue short-term achievements. It’s a problem the whole industry faces. Now Huawei has arrived in uncharted territory. If we don’t play a leading role and make contributions now, future development of the whole industry will be affected.
NC: How will Huawei cooperate with universities?
XW: We cooperate with hundreds of universities across the globe. But in the past, it was mainly medium or short-term cooperation that demanded results within five years. We hope there will be more long-term collaboration. Now the institute focuses on research in the next five to 10 years, and hopes to explore innovative fields for all of society.
First, cooperation with universities will involve funding to help top universities find the best experts worldwide. Second, Huawei will fund research at universities in key technologies that interest both. In addition, when we need to make breakthroughs in certain key technologies for commercial use, we can contract universities for commercial research and make specific requirements.
For exploratory research, we don’t have specific requirements. It is literally probing a field that may end up with a published article or proves to be a dead end or even nothing at all. Finding nothing is also an achievement, as exploration is a process of trial and error. Huawei does not require patent rights but just hopes such exploration may create value for the entire human race. That is also why we make ‘open innovation and inclusive development’ the core idea behind Innovation 2.0. The former means to unite global resources, including those from universities and Huawei, and gather scientists and other partners to do the research together. The latter means all of humanity will share in the achievements of research and innovation. We will benefit from it too, actually. Even though there are a lot of uncertainties, once breakthroughs are made, they will mean big opportunities for the industry.
NC: As an enterprise, what does Huawei want to achieve by investing in basic research? XW: I don’t think there are clear expectations. There is no indicator for our performance either. If I have to name one, it is to ensure that we will not lose our direction or miss any opportunities in the ICT industry. We should not base evaluation on short-term results. Instead, it should be of historical significance.
NC: Huawei stresses open innovation. Does that mean it will follow a different standard? XW: To make it big, first there must be global standards. Even though we stress open innovation, it is mainly about openness in innovation. Standards must be not only Chinese but unified worldwide. Meanwhile, we can cooperate with other enterprises and universities to innovate our own technologies and solutions to set industry standards.
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