The purpose of the plant will be to produce 5G and other wireless communication equipment to mainly supply the European market.
Eiffel Tower, Paris, France. Image credit: Chris Karidis/Unsplash
EqualOcean mentioned in an article published earlier this month that Liu Kang, Huawei’s chief representative in the European Union, said that the company was preparing to build a factory in Europe to produce 5G equipment while the site had not been finalized.
The news, first announced by the Chinese telecom giant on Thursday said that it would begin manufacturing radio equipment for next-generation 5G networks in France, its first such facility outside of China.
In attempts to offset the loss of business in the US amidst the trade war between China and the US, Huawei has been focused on the European market more than ever.
Huawei plans to invest EU 200 million in this wireless product manufacturing plant for land, plant construction, and equipment procurement. They plan to complete the overall construction with advanced production equipment and tools from leading European local partners.
With this plant, Huawei says it will be able to cover every link along its value chain and drive local industries forward, both upstream and downstream. These links include R&D, sales, procurement, production, and logistics, services, and talent development. The plant will also be one of Huawei's first implementation of its advanced manufacturing technologies in Europe. This will drive the technical competitiveness of the European industry and boost the resilience of local supply chains and infrastructure.
It is estimated that this project will generate EU 1 billion worth of products annually and directly create 500 jobs. Established for over 30 years, Huawei's businesses cover more than 170 countries and regions. Europe is an important market for Huawei and the company has been working in the region for 20 years.
The US has been pressuring European allies to exclude Huawei from their 5G networks, but France and Britain have so far refused to be swayed.
According to Business Insider, France is in the early stages of rolling out its 5G network and had not yet selected suppliers. Macron's government has said that, in principle, it would favor Finland's Nokia or Sweden's Ericsson, but it would give Huawei a fair shot.
Huawei has had mixed success in the 5G sector. In the UK for example, three of the biggest mobile operators, EE, Vodafone, and Three, all opted to use Huawei equipment to build their 5G networks.
The only exception to this is O2, which has instead opted to use 5G equipment from Ericsson and Nokia. All of this has put pressure on earnings at the firm.
Last month, Nokia announced it would cut 180 jobs in Finland as it seeks to ramp up investment in 5G technologies and digitalization.
People familiar with the matter told Bloomberg that Nokia is now exploring strategic options as fierce competition puts pressure on the Finnish network equipment maker’s earnings.
In April last year, consulting firm Strategy Analytics showed comparative results from leading global 5G suppliers and the 2023 5G global market forecast report. The report compared Huawei, Ericsson, and Nokia in terms of their 5G network performance, product portfolios, contributions to standardization, R&D investment, product delivery, etc. The results showed that Huawei's 5G competitiveness is far ahead of that of other vendors.
As the world’s leader in the 5G race gets cut off from the US, Huawei is set to focus more on other markets and we believe 2020 will be an important year for the company and development of 5G around the world.