Before the consolidation in the Mobile Radio Access Network (MRAN) market that occurred in the past decade during Huawei’s ascendancy, there were a dozen major RAN vendors.  They included Motorola, Lucent, Alcatel, Siemens, Nokia, Ericsson, NEC, Fujitsu, Samsung, Nortel, Huawei and ZTE, and they hailed from the US, France, Germany, Finland, Sweden, Japan, Korea, Canada and China. 


As Huawei entered the market, using a price aggressor strategy, it catalyzed mergers, resulting in the elimination of Motorola, Lucent, Alcatel, Siemens, Nortel, plus a reinforcement that led to the Japanese and Korean players to sell primarily to their home markets.  The result is that in many markets during recent years, there were only two vendors left, and that left operators with little choice but to look elsewhere. 

The punchline is that going forward, due in part to Open RAN, and in part to the response of operators looking outside their traditional supplier base, we now have 10 RAN players who can bid on projects.  And there is a multiplier on top of the 10 players, because going forward,  operators can buy radio heads from different vendors than their primary RAN baseband vendor, essentially doubling the number of choices an operator has when making mobile RAN vendor decisions.

Here is how we arrive at the conclusion that there were only two players per major geography.  Just a couple years ago, the state of affairs was quite different; we had only Nokia, Ericsson, Huawei and ZTE as players, and last year, it became clear that in the US, only two major players were left.  In China, the same could be said, with Huawei and ZTE as main suppliers (Ericsson has won business there and Nokia ceded the market in 2019).  And in 2020, we’ve seen much of Europe and English-speaking Asia whittle down to two suppliers, as well.

And here is how the procurement teams at operators have much choice in the future.  The “Open RAN” vendors are now deemed viable given the success at Rakuten and the push by operators to demand Open RAN compliance, and these include Altiostar, Mavenir and Parallel Wireless.  Nokia and Ericsson are invited to most, if not all bids worldwide. 

Huawei and ZTE are invited to many, but a declining number of bids in markets that are siding with the US viewpoint.  We saw a turning point in late 2018 when AT&T announced it will buy from Samsung, who has now gotten a strong foothold in both India and the US.  And, more recently, we have seen two Japanese players, NEC and Fujitsu, in some way filling in the void left by Huawei and ZTE’s woes in the US/China spat, as they get wins (Fujitsu recently won DISH) and get invited to bid (NEC and Fujitsu are being asked to bid on UK projects).  Add these up and we have Altiostar, Mavenir, Parallel Wireless, Nokia, Ericsson, Huawei, ZTE, Samsung, NEC, Fujitsu. 

There are other factors at work that are adding to more RAN choices, as well.  Two such trends are Facebook’s efforts, ONF’s efforts and the variety of radio head vendors who are now viable with Open RAN/FB/ONF efforts.  Facebook has promoted projects such as Telecom Infra Project (TIP) that have many goals, including one that supports the goal of $1,000 radio heads (these cost much more from the major vendors). 

The Open Network Foundation (ONF) supports projects such as SD-RAN and Aether. 
Radios can be purchased from non-traditional sources, as well because with all three projects we have mentioned above (TIP, ONF SD-RAN and Open RAN), these allow radio purchases to be made separately from baseband purchases, literally doubling the choices that operators have when building out a roster of vendors.

The trends in mobile RAN have changed significantly.  Vendors with little to lose (startups and players entering new markets) are getting aggressive to grow their businesses.  Incumbent vendors are at risk, as their business practice of selling baseband and radio simultaneously to captive operators is coming to an end.  We may look back at this early 5G era and say there was a lot more to it than just the upgrade to 5G, and it begs the question, who will acquire whom to consolidate the market once again and get pricing under control.

The big ideas unveiled at the conference were twofold.  First, Huawei is promoting worldwide open standards as a counter to the likelihood that if it gets cut off from US-influenced technology, it may have to create its own, non-standard technology.  Second, the company is promoting “F5G,” which is “fixed 5G,” or a global standard for Passive Optical Network (PON) technology that operates at as high as 50 Gbps and can be used for fixed broadband, optical LAN (Campus Networks), cellular backhaul/fronthaul, and even optical Access uses.  The company also discussed evolutions or themes discussed at previous events like HAS2019, such as mmWave, FDD+TDD integration, Control User Plane Separation (CUPS), and more generally, 5G.  Much to our surprise, the opening keynotes differed significantly from the previous year’s themes in that there was no discussion of the advancements the company was making in developing in-house semiconductors and optical subsystems.

First of all, the company’s keynote, presented by Rotating Chairman, Guo Ping, was focused on Huawei’s views towards the US efforts to thwart Huawei.  The Chairman complained about the year-ago Entity List actions, and then more about this week’s escalation of prohibitions against Huawei.  Huawei expects these US actions will negatively impact Huawei in the future.  It said it is ramping up R&D and is focusing on open standards.  It says US’s efforts will hurt US interests.  In the past year, Huawei says it has redesigned over 1,000 circuit boards and that it grew R&D 30% last year.  Huawei’s supply chain is not “closed off, but open than ever,” and it “will continue to diversify” its base of suppliers.  As a result of US restrictions, the company fell $12B short of its plan in 2019.  Huawei’s view is that it simply hopes to “survive” in 2020.  One key message from the keynote was that Huawei does not want to see a world with two standards and two supply chains for the communications industry.

The company’s big news, in our view, was that it is advocating for F5G, which is a variant on PON technology that could be used in nearly all parts of networks, from indoor enterprise, to residential and business last mile, to cellular backhaul/fronthaul, and so on.  The vision, which was shared by co-sponsor, ETSI, a standards body in the telecom marketplace.  We think Huawei’s goal of creating a single technology platform that can be used in various markets where today multiple standards exist could be a good one.  For instance, in campus LAN environments, one could certainly argue that copper-based Ethernet has run its course (our forecasts are for declining revenue), and in the “last mile,” 1G-class PON and its currently shipping successor, 10G PON will need to be replaced by something.  F5G, which would operate at 10 Gbps and 50 Gbps speeds, differs from another consortium’s approach to a 10G PON successor, which operates at 25G.  So, on the one hand, Huawei is entering the market with a big idea – to put the same kind of fiber system “everywhere” (to the home, in the business, to the cellular towers, for instance) – at a time when many of these markets are currently, or soon will be, undergoing a transition, is a good idea.  On the other hand, there are already other standards bodies working to create accepted approaches for “to the home” fiber at 25 Gbps, for “in the business” at 2.5/5 Gbps, 10 Gbps, 25 Gbps and 100 Gbps (some copper, some fiber), and “to the towers” at 25 Gbps, 50 Gbps and 100 Gbps.  If Huawei gets it way, and F5G succeeds to become a standards, while at the same time the other standards continue to progress as they are today, then we’ll end up with two standards, the Huawei/ETSI approach, and the other approaches used by BBF, IEEE, etc.  This is what Huawei said it is trying to avoid in the keynote.

We enjoyed Huawei’s perspectives about its experience in the Chinese mobile and fixed market, where we see increasingly Chinese vendors are serving an increasing portion of capital equipment needs, while at the same time, it was interesting to hear about how the company is taking its experiences to other markets like Europe, Middle East, Asia and Latin America.  Several topics it discussed that were important, in our view, were the importance of mmWave, FDD+TDD integration, and CUPS.  To review each, we thought it was interesting that Huawei continues to view that the mmWave frequency as being limited to a US-only 5G market implementation; it views the C-band (which is mid-band) as the main spectrum where 5G will be deployed around the world, and it thinks this is sufficient to achieve 5G’s goals.  Next, the company spent ample time discussing its RAN technology that allows both TDD and FDD to operate simultaneously, explaining that FDD is best suited for lower frequencies and allows for superior uplink capabilities, while TDD is best for mid-band and is well-suited for MU-MIMO, high capacity throughput radios.  The company also shared that its CUPS technology has been adopted by 60 customers, which represents significant progress.
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We are eager to see the standards “battle” resolved, whether that means Huawei works closely with existing standards bodies, or whether other players worldwide, get on board with F5G, so that the communications industry will benefit from volume shipments and consumers may benefit with lower prices and new technology getting deployed sooner.

Commscope expects 6 GHz 802.11ax products to be shown at the CES show in January 2020 and that FEM and filters are not available today but will be by year-end or early 2020.

Newracomm is an 802.11ah (900 MHz WiFi) chip company that had won an award at the show. It claims to be an early leader in the market and based on comments made during presentations, we expect by 2H20, we will see systems and IoT services based on these types of chips.

Celeno, a stand-alone WiFi chip company, demonstrated radar on WiFi chip capability - the company won multiple award at the show. The company expects that a year from now, its Doppler on WiFi will emerge in products from SPs such as BT, Orange, and Comcast. The Doppler service only consumes about 3-5% of throughput capability when using Doppler and enables some very interesting capabilities such as fall detection, proximity detection, people counting and arm gestures.

ORAN and CBRS were the main themes at Mobile World Congress Americas, held in Los Angeles. I have to say, though, that unlicensed was the third most important theme, though it will emerge to the main stage in future years.

ORAN encompasses several topics woven together. ORAN is a set of common interfaces that describe how various devices in mobile RAN work together. ORAN may also represent a new way of building radio networks. Recently, new vendors are being invited to bid on major mobile network projects, including Mavenir, Altiostar, Parallel and others. And, the major market share players in mobile RAN, which include Ericsson, Nokia, Huawei, Samsung, and ZTE are being asked by operators to support ORAN. The incumbent vendors are responding in various ways: Samsung, a challenger in the market, has whole-heartedly embraced ORAN, while Huawei has only recently acknowledged the existence of ORAN. Ericsson and Nokia have embraced ORAN with the view to embrace and extend - in the sense that Microsoft used this term in the 1990s. Based on presentations made by Ericsson, Nokia, and Samsung, we expect that the incumbents, Ericsson and Nokia,will embrace ORAN but will establish a path to continue serving customers with the same vertically integrated business models of today. We are eager to see the results of mobile network operator bidding to observe how many startups win projects for wide scale deployment.
 
CBRS. Today, CBRS is available in the US market and has been so for about a month. We had an interesting opportunity to moderate three panels on the stage at MWCa and found some very interesting indoor/campus uses for CBRS, including WiFi backhaul, secure/critical communications, surveillance, IoT/sensor monitoring. Since CBRS indoor spectrum generally allows for more output power than for WiFi, the range is better. We see this as a key advantage for CBRS users, though enterprises who take advantage of the so-called OnGo service must pay various monthly fees such as those for the SAS and potentially other ongoing services. We expect that CBRS will be successful in certain verticals.
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Unlicensed.  We believe the existence of CBRS could uncork the value of unlicensed spectrum at 900 MHz, 5 GHz, 2.4 GHz, and 6 GHz. We are conducting significant research into each of these and other spectrums.

Huawei had record European revenue in 2Q19 for the Ethernet Switch market. 

Both Data Center Switching and Campus Switching showed strong performance in Europe in the quarter despite the ongoing trade war.  On an overall basis, Huawei’s Ethernet Switch results were flat Y/Y.  China results for the company were down slightly Y/Y, but we note significant competition in China from local companies like H3C, Ruijie, Sundray, as well as several others.
 
With over a dozen vendors reporting results already, Europe has performed inconsistently.  A little more half of the vendors grew Y/Y while the rest had Y/Y declines.  While we expect Europe to fluctuate, especially with vendors have unique country and deal exposure, the results are unique and imply interesting share results for the region when we publish the 2Q19 report. 

Today, Huawei announced 1H19 results were CNY401.3B, up 23.2% Y/Y.  Carrier business 1H19 revenues were CNY146.5B, with 50 commercial 5G contracts and shipments of more than 150,000 base stations.  Enterprise 1H19 revenues were CNY31.6B.  Consumer Business 1H19 revenues were CNY220.8B, with 118M smartphone units, up 24% Y/Y.  The company said "revenue grew fast up through May.  [and that] we continue to see growth even after we were added to the entity list."

The fact that Huawei says it is still experiencing growth despite being placed on the US Entity List is important because it says that despite the efforts of the US to stymie Huawei, it is still growing.  Huawei has typically provided semi-annual results to the public, so it is not odd that has not provided 2Q19 results, which were almost certainly weaker than 1Q19 results given the US efforts to slow Huawei.
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According to news reports and press and social media announcements by high-ranking members of US government, the US government has put Huawei on its so-called "Entity List" of the Bureau of Industry and Security (BIS).  Our read on this is it similar to what happened with ZTE during C2Q18 last year, a move that severely curtailed ZTE's shipments and revenue until ZTE made concessions and was removed from the list.  Many, but not all, Huawei products use technology only available from US suppliers. US-made semiconductors are the most significant Entity List target that Huawei needs to ship its products.  Significant US semiconductor suppliers to Huawei include Intel, Xilinx, and Broadcom.  

Huawei is such a significant vendor in many of our coverage areas, including Mobile Radio Access Networks (RAN), Ethernet Switching, and Servers, for instance, that we feel it is a good time to point out that 2019 market-level estimates may be at risk.  Additionally, since Chinese cloud services players, like Baidu, Alibaba and Tencent cannot delay their capital infrastructure build-outs, alternate suppliers may benefit.

We think it comes as no surprise to Huawei that the US is putting it under pressure.  Just over a year ago, we attended the Huawei analyst summit (April 16, 2018) and its then-chairman said in response to the question "Will Huawei find alternate suppliers for data center products, "Today, Intel is the dominant player.  Our point of view, we look forward to a more diversified landscape; but we work with Intel mainly now."  Additionally, at Huawei's most recent analyst summit (mid-April 2019), the three main keynote speakers, all high-ranking executives of the company spoke about how much progress Huawei has made in developing in-house semiconductors and what its plans are to continue developing more.  We do, however, think that despite Huawei's diversification efforts that it still has significant reliance upon key US chip companies.

Huawei hosted 700 analysts and media participants in Shenzhen China last week to attend its annual analyst summit, nick-named HAS2019.  The company's high-level message was simple - the company is an innovator and is moving down the stack into semiconductors and is partnering with and funding university projects to develop basic research.  This year’s message was different from than the prior-year meeting, but several transformative events have occurred between this meeting and the prior year's, most notably the 2Q18 shipment ban on ZTE, the US / China trade dispute and US efforts to thwart Huawei’s participation in the 5G infrastructure of its allies.  Interestingly, during HAS2019, the Apple and Qualcomm announced their chip-supply and patent settlement, Samsung announced its foldable phone (which has been met with criticism), and Ericsson & Swisscom announced that the operator went live with its 5G network.  All three of non-Huawei events highlighted the importance of Huawei’s chips and innovation announcements.

The company made announcements in its main keynote presentations on day one about seven different chip projects delivered recently or planned shortly.  Chip-level is unusual for what are typically high-level presentations from a keynote-level presentation.  These chips (seen in accompanying pictures) are:

• Ascend 310/910.  Artificial Intelligence (AI) chip for cloud (leads to its Data Center Ethernet Switch iLossLess cloud service)
• OptiXtreme H6 oDSP.  Optical transmission Digital Signal Processor (DSP).
• Hi 1822.  FC/IP chip used for products including Solid State Drives (SSDs)
• Atlas 200 AI acceleration for AI computing intended for September 2019 announcements at Huawei Connect
• Tiangang 5G Basestation chipset
• Balong chip series intended for 5G smartphones and other Customer Premises Equipment (CPE)
• Kungpeng ARM chips for computing

The company shared more details about other chips in breakout sessions on the second and third days of the conference, as well.  The point we are making, though, is that upper-level management provided significant detail about semiconductor developments at Huawei.

The company shared more details about other chips in breakout sessions on the second and third days of the conference, as well.  The point we are making, though, is that upper-level management provided significant detail about semiconductor developments at Huawei.  Another relevant semiconductor-related point to make is that the company is de-emphasizing its reliance on Intel-based architecture and instead is focusing on devices such as ARM-based processors, as well as GPU, FPGA and NPU semiconductors.
We would be remiss if we did not mention some of the system-level announcements and observations related to 5G that were made at the HAS2019 conference, which include:

• MU-MIMO.  Of Huawei’s 70,000 shipments of 5G base stations as of the show, 97% were MU-MIMO based.  The company expects MU-MIMO to be deployed not only in urban areas but also in rural areas.
• SingleRAN Pro.  The company is taking an architectural approach that is different from what some service providers in the world want; it is delivering an integrated product approach where multiple frequencies and base stations are integrated into the same enclosures.  This converged approach is different from the architectural approach being promoted by some smaller vendors like Altiostar, Mavenir and Parallel Wireless, which uses the O-RAN standard and features a disaggregation between various components like antenna and base band processing.  Huawei’s rationale is that it is less expensive on capital spending and operational spending to use the integrated approach.
• Converged Mobile Packet Core.  The company plans to have 1H19 commercial availability of its 2G/3G/4G/5G NSA/5G SA packet core system.  In slides depicting this product, it prominently features chip systems such as GPU, FPGA, NPU, and ARM but specifically excludes x86 references. 
• Huawei expects to deliver its first 5G phone in November 2019

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even more follow on

Today, Amazon announced that it will acquire eero, a consumer mesh WiFi equipment company that as of 3Q18 had 13% revenue share.  In 3Q18, the  consumer mesh WiFi market measured just over $150M, which was up just over 34% Y/Y.  The number one player by revenue was NETGEAR in 3Q18, followed very closely by Google, who had retained the number one spot for the 5 quarters before 3Q18.  Now, with Amazon's acquisition of eero, just three players will have well over 3/4th of the consumer mesh WiFi market.  What's interesting here is that two Internet titans, Google and Amazon, are attempting to disrupt the consumer networking market that up till 2015 was dominated by hardware players such as NETGEAR, Linksys, TP-Link, D-Link  (consumer WiFi vendors) and adjacent players such as Technicolor, Arris, Huawei, ZTE and Nokia (Broadband Customer Premises Equipment vendors).

So, what does it mean that now both Amazon and Google are battling for primacy in the home networking market? 
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It is complementary to their interactive speaker business.  Both Amazon and Google have introduced various hardware products for the home, but most successful have been both of their interactive speaker products, which for Amazon has been the Echo and Dot and for Google Home.  These speakers are generally in an "always-on" mode, which allow them to listen to all sounds nearby, and which also means they are generally always connected to the WiFi devices in the home.  By always being connected, these speakers consume much of the available WiFi bandwidth in the home, deteriorating the available spectrum for other devices.  One obvious solution, which is being made available by wireless chip giant, Qualcomm, is to integrate WiFi chips with speaker chips.  That's the direction that both Amazon and Google may pursue - to integrate Home with Google WiFi and Echo with eero.  This will mean that multiple WiFi mesh devices will also represent multiple interactive speakers in the home, all while combating the over-use of WiFi spectrum in the home.
These Internet giants can, and probably will, attempt to overwhelm the market with low prices, subsidized by primary businesses.  We already see that Google's price for a 3-pack is 37% lower than eero's comparable system.  Our working theory is that Google has been selling close to no margin and that eero has been experiencing a 30's percent margin.  This is probably not good news for the following companies who either do have gross margins above 30% or we assume do, like NETGEAR, TP-Link, D-Link, and others mentioned above.

​The main theme of the the Huawei HAS 2018 meeting keynotes was Artificial Intelligence and, secondarily, nearly ubiquitous networks connections across the world.  Huawei expects 86% of enterprises to have experimented with AI by 2025 (<5% in 2018).  It is leveraging AI across nearly all its products and will offer a full stack AI solution to all Huawei partners at its @Huawei Connect 2018 conference (Oct 10, 2018).

More specifcially, Huawei is using AI to elevate products & solutions to new levels: cloud, networks, devices, EI, SoftCOM AI, and Intelligent phones.  The company's strategy has changed over time and is now AI-focused:

2006-2011: Single strategy: All IP
2012-2017: SoftCOM: All Cloud
2017+:     All Intelligence: SoftCom AI (autonomous networks / services 2.0) - this reduces operating and maintence costs

The company expects that networks will be 10x more efficient in the operation of equipment as a result of AI.  

By 2025, Huawei expects 440M AR/VR users, 40% of cars to be 'connected," 80% of users with access to mobile broadband, usage of 1 Gbps / user / day (versus .03 in 2018) and 20B connected devices worldwide.


Connected Devices Forecast (Huawei) by 2025: 40B sensors and 100B connections.  This thinking is based on data including that there are: 

• 4B livestock in the world
• 300m streetlights
• 1.8B utility meters
• numerous bike programs in major cities
• numerous greenhouses

The company's product lines are very diverse; to wit, the company introduced a helmet for the blind, which will be available soon.  

Huawei expects NB-IoT (LTE-based IoT capability) to reach almost full coverage in China in 2018.  Additionally, the company expects NB-IoT to reach 100 networks by the end of 2018 (versus 39 in 2017) and to be available on 1.2M base stations (from 0.5M in 2017) and to be connected to 150M connections (versus 10M in 2017).  

The company boasted about several developments:

1. Chipsets for cloud data center systems.  The company highlighted its internally developed Atlas (intelligent cloud hardware).
2. The company expects its cloud services will become one of major 5 clouds.  Uses smart NICs for CPU optimization and is 'open.'
3. The cloud service from Huawei will be low cost because Huawei makes all the equipment necessary to build this cloud
4. Internet of Vehicles system was was built for Group PSA (French auto company known for the Peugot brand)
5. 5-An example of the company's "Intent-Driven Network" was its AI-based premium home broadband for a better user experience on Chinese based PON systems in use today.  Real time data collections allows 40% reduction on door-to-door service and fault prediction of 85% of Wi-Fi faults and 30% of all network faults.
6. AI-enabled, software-defined cameras are now available that perform low-light feature extraction (e.g. facial detection/comparison) over 85% of the time.  And, using the Huawei AI chip, it can outperform CPUs by 25X and GPUs by over 6x.
7. VR/AR will create a $2.7 trillion ecosystem in the future.  The company reminds the audience that it demonstrated teh first CloudVR Proof of Concept at the March 2018 MWC conference.

Q&A after keynote:
Mr. Eric Xu, Rotating Deputy Chairman of Huawei dodged several important questions relating to trade tariffs, cloud business unit revenue targets, growth rates of each major business units, specifics about AI full-stack claims made during the keynote, and instead focused generally on the AI theme.  Xu did, however, however, answer a handful of questions that were quite interesting:  Huawei won't acquire DRAM, Flash companies; and that 5G is not so revolutionary - it is just an evolution following LTE. Additionally, Xu mentioned that in 2H18, Huawei will launch end to end 5G solutions  and by 3Q19, it will launch 5G capable phones.  Xu said Huawei will continue to work with Intel on x86 for the foreseeable future.

More Q&A specifics:
Trade Tariffs and ZTE.  (In a moment of levity, however, Eric Xu smiled when the words ZTE were mentioned - recall that a day earlier, ZTE was penalized by the US).  We will focus on our customers and will ultimately survive. 

Cloud 1.5B by 2020, will you hit the target?  Will offer cloud services to telco service providers.  Huawei smartphones will leverage the Huawei cloud.  Enterprise customers will consume cloud services such as video, computing.  In future, trend will be enterprises will move to hybrid cloud and public cloud will take a major share.  Huawei cloud provides compute/storage/networking to enterprises and government.  200K x86 servers in Huawei cloud.  Revenue with external customers - won't share it with you - maybe .  

AI chipset question:  We don't position chipset as a standalone business - won't sell to external customers.  Will be used to differentiate Huawei products.  Smartphone - we use multi-vendor strategy always; in other worlds; have multiple Qualcomm, NTK and others.  Remain committed to multi-vendor strategy.  Don't want vendor lock-in, however.  If we only have one vendor, what might happen to our smartphone business, Xu asked.  

Enteprise business growth? Declined to comment on specifics, but said he encourages each to grow rapidly.  

How do customers get to 86% AI usage (the question was asked by an audience member by incorrectly referring to the statistic that was made during the keynote - specifically, Huawei said AI experimentation will be 86%, not AI usage)?  Will give clearer answer at Huawei Connect 2018.  For now, can share that we will use AI on ourselves first, then help customers on various functions such as finance, human resources, networks, etc.  

Supply chain - will you acqire your suppliers?  We do joint innovation with suppliers to meet Huawei's needs; push multi-source strategy, however.  Will not invest in DRAM, display, flash.

5G wasn't mentioned much in the presentation, why?  We don't have as high expectations as some others; 5G is just one of many products we offer and is just a natural evolution from 4G.  You don't have a fundamental difference between 4G and 5G - consumers just see faster speed and lower latency.  LTE already support autonomous driving.  Past couple years, governments have regarded 5G as too important.  June 2018, will only address eMBB - faster speeds.  2019 - will have fully 5G compliant system that does low latency.  4G is pretty robust; we don't see 5G as a national coverage network - it'll just focus on city centers.  However, once one carrier announces 5G, then all others must.  50% of Chinese have wireless connection capable of 4K but there are still no 4K stations.

2H18, end to end 5G solutions available.  3Q19, will launch 5G capable phones.

Share trends for Huawei at operators.  Revenue growth of telecom services is a challenging topic.  This revenue growth topic is why titan operators express concern about moving to 5G; instead, Huawei thinks moving to improved intelligence will assist operators.  Video will become more and more important as telcos become media companies too.  

Will AI become a privacy concern?  Any technology has double-sided effects.  With AI, some believe it can be dangerous.  Xu believes in the wisdom of man.  Look back to history of mankind, and our humanity can do same for mankind.

Will Huawei find alternate suppliers for data center products?  (Xu also smiled about this question before answering).  Today, Intel is dominant player.  Our point of view, we look forward to more diversified landscape; but we work with Intel mainly now.