Telecom Review speaks exclusively to Steven Yi, President of Huawei Middle East, on how the region’s tech industry is shaping up in 2022, and where Huawei is looking to create value for the ecosystem.
We have just emerged from a challenging 2021. Looking at the ICT industry specifically, what key lessons is Huawei taking into 2022?
On the one hand, the ICT sector faced similar safety and health challenges in protecting its people, as did other industries. On the other hand, our sector has become the very definition of an essential industry in meeting the goals of business continuity, economic recovery, and driving national development plans and visions across the Middle East. We felt a responsibility to not only ensure employees and partners remained safe but that we delivered the infrastructure and solutions needed to support the resilience and continuity of critical sectors of the economy.
Having accomplished that successfully over the past year, the digital economy is now recognized as the engine driving growth and diversification across the Middle East. As just one example, research firm Strategy& estimates Saudi Arabia's digital economy contributes 49% to the country's GDP.
In addition to this economic impact, we are placing greater emphasis on green and low-carbon technologies to promote a sustainable future for all. The combination of digital transformation and green development presents the ICT industry with incredible new opportunities to help organizations cut their energy consumption and go low-carbon.
All the above objectives have a common denominator: they rely on advances in technologies such as 5G, cloud and AI, which are all vital for solving modern challenges and securing future progress.
Since 2020, the pandemic has spurred a pivot toward digital products and services. Was that a temporary shift, or do you see this momentum continuing in 2022?
The last two years were certainly a turning point for the ICT sector. They proved beyond question that digitization is the biggest enabler for our society's evolution.
Digital technology and intelligence are pushing the digital economy into a new phase of development, which will create huge opportunities for not only the ICT industry, but also all other sectors and society. Research findings show that a 20% increase in ICT investment can grow a country’s GDP by 1%. It is estimated that the global digital economy has grown 2.5 times faster than global GDP, and return on investment in ICT has been 6.7 times that of non-ICT investments on average.
This momentum is not going to change. Even in a post-pandemic environment, we feel obligated to help Middle East organizations in their digital transformation and to reimagine the future. It involves bringing technological advances to even more industries and creating new value by helping governments and enterprises go digital while operating more intelligently. The task ahead is about ensuring all people benefit from technological progress.
The Middle East is ahead of many other regions in this respect. Because of the fast roll-out of 5G, for example, some countries in the region serve as a real proof point of how technology can help to advance the development of all industries, especially when integrated with technologies such as cloud and AI.
The past year saw renewed commitments to environmental protection, especially in the Middle East. What role will the ICT sector play in realizing new ambitions around carbon neutrality?
Carbon neutrality has emerged as a shared mission by the global community. Existing use cases prove that technology innovation will play a central role in tackling climate change and achieving carbon reduction goals. Therefore, the global tech ecosystem needs to collaborate to build simple, green, and intelligent infrastructure that helps all industries.
At Huawei Digital Power, for example, we are now integrating digital and power electronics technologies to develop clean energy and help traditional energy sectors build a greener future. Founded in 2021, it now looks at five key areas: Smart PV, data center facilities, mPower for electric vehicles, site power, and integrated energy solutions. While Huawei will pursue cooperation with businesses in all of these five domains in the region, I believe that Smart PV and data center facilities are particularly important. As of September 30, 2021, Huawei Digital Power has helped customers generate 443.5 billion kWh of green power and save 13.6 billion kWh of electricity.
Looking at other infrastructure such as 5G, what types of investments are you anticipating from regional telcos and others in the first half of 2022?
As mentioned, digitization in the Middle East has accelerated remarkably over recent years. Global network traffic has increased by around 50% during the pandemic. Those telecom operators who invested early in 5G have in turn seen significant payoffs, faster revenue growth and have opened new revenue streams. Regulators in the Middle East have also continued to release policies that significantly promote 5G development.
We anticipate these investments in 5G infrastructure and applications to continue climbing in 2022, especially as industries such as manufacturing, energy, healthcare, and others develop more scenario-specific 5G applications in their respective fields. We have worked with carriers worldwide to build 5G networks that deliver the best possible experiences in these areas. We have also teamed up with carriers and partners to build a thriving 5GtoB ecosystem, and made breakthroughs with large-scale industry applications. We support 3GPP, working with industry partners to explore the evolution of 5G standards and ensure unified global standards for 5G. We encourage industry organizations in key verticals to work closely with 3GPP to create new value for their industries.
Being in a highly-regulated industry, how concerned are you about technological politicization this year?
This is definitely an area of concern. Huawei and others have made remarkable progress in rolling out technologies that would have been unimaginable only a decade ago. At the same time, an unpredictable business environment, the politicization of technology, and a growing deglobalization movement all present serious challenges to this progress. We firmly believe that the solution to such challenges is collaborating in an open ecosystem and upholding unified international technical standards. For instance, Huawei is an active member of more than 600 standards organizations, industry alliances, and open-source communities, where we work with our peers to develop mainstream standards and drive the industry forward.
We are more confident than ever that global integration and economies of scale can make the whole world more efficient. We must work together openly, sharing both the risks and value of shared success.
Speaking of ecosystem collaboration, what is Huawei's strategy when it comes to prioritizing investments in R&D in the region?
First and foremost, we must continue investments in future-oriented capabilities. We appreciate that cutting costs won't pave the way to sustainable success. It is why Huawei's R&D investments over the past decade have exceeded $110 billion, with more than 10% of its sales revenue going back into R&D. We have also established Open Labs in the Middle East and worldwide to support joint innovation with our partners. Only through investment can we grow stronger.
Equally important is that we continue to attract top talent from around the world in key domains like software, algorithms, and computing power. We are constantly looking at ways to encourage our employees to dig deep into science, dive headfirst into uncertain domains, and solve real business issues through technological exploration. To do this, we are nurturing an open organizational climate and supporting initiatives that cultivate outstanding young talent in particular.
Moving forward, we will continue to increase our investments in R&D – and in the future. This will create value for our customers and promote sustainable development for society, the economy, and the environment.