Text/Yang Jianyong
Since the global 5G was launched, communication companies have ushered in the best period of development. According to the data from the GSMA Mobile Economy Report, by the end of 2021, the global mobile users reached 5.3 billion, and it is expected that by 2025, the global mobile users will reach 5.7 billion, of which, by 2022, the total number of global 5G connections will reach 1 billion. 5G use is growing rapidly, with 5G connections accounting for 25% of total connections from 8% in 2021 to 25% by 2025, and more than two-fifths of the world's population will live within the coverage of 5G networks.
The report also shows that by the end of 2021, there will be 22 commercial 5G in 16 countries and regions around the world, and more investment is expected in the next few years. Meanwhile, between 2022 and 2025, operators will invest $620 billion, of which 85 percent will be spent on developing 5G. It should be pointed out that huawei, Ericsson, Nokia, Samsung and ZTE are the five major communication giants, occupying the vast majority of the global market.
ZTE's revenue is 114.5 billion yuan, and Huawei's revenue is 634 billion yuan
The global communications market is fiercely competitive, especially in the situation of fierce competition around the 5G track, ZTE's revenue still shows a steady growth trend, with annual revenue of 114.5 billion yuan in 2021, an increase of 12.88% year-on-year; net profit of 6.8 billion yuan, an increase of 60% year-on-year. However, this revenue is far less than Huawei. Although Huawei is facing a difficult environment, in the view of Guo Ping, Huawei's rotating chairman, 2021 has withstood a severe test, and the overall operating situation is in line with expectations.
Full-year 2021 revenue is expected to be approximately RMB634 billion. Of course, compared with 891.4 billion yuan in 2020, this revenue scale decreased by 257.4 billion yuan in 2021, down 29% year-on-year. Mainly due to the limitation of chips, which led to a sharp contraction of smartphones, which in turn dragged down overall revenue. However, in the face of the harsh environment, Huawei's tenacious will, as well as technological innovation, will not only survive, but also will survive with quality.
In a difficult environment, Huawei still maintains high-intensity R&D investment. According to statistics, the top five manufacturers in global R&D investment are Alphabet (Google's parent company), Huawei, Microsoft, Samsung, and Apple. In terms of R&D investment, Huawei is second only to Google, with more than 120 billion yuan of R&D investment ranking second in the world, pressing on technology giants such as Samsung and Apple, reflecting that Huawei is a company that does not pursue high profit margins, but pays attention to technological innovation, making it a global technology giant.
In contrast, ZTE's R&D investment is not large. According to the data disclosed in the financial report, ZTE invested 18.8 billion yuan in research and development in 2021, an increase of 27% year-on-year, and the proportion of R&D investment in operating income was 16.42%, an increase of 1.83 percentage points over the previous year. Compared with Huawei's R&D investment of 120 billion yuan, ZTE's R&D investment is eclipsed, but the strength of technological innovation and patents cannot be underestimated, and it is a major contributor and participant in global 5G technology research and standard setting.
As of December 31, 2021, ZTE has approximately 84,000 global patent applications and approximately 42,000 granted patents worldwide over the years. According to a report released in November 2021 by IPLytics, an internationally renowned patent data company, the Group ranked fourth in the world in disclosing 5G standard essential patent declarations to ETSI. It belongs to the first camp of global patent layout manufacturers.
Benefit from the 5G dividend
It is worth mentioning that the mainland has built the world's largest 5G network. Data from the Ministry of Industry and Information Technology show that by the end of 2021, a total of 1.425 million 5G base stations have been built and opened nationwide, and more than 10,000 application innovation cases in the 5G industry have covered more than 20 industries such as industry and medical care, and the application links have penetrated from production auxiliary links to core links, and more than 1,600 "5G + industrial Internet" projects are under construction, which has played an important role in the transformation and upgrading of the real economy to digitalization and intelligence.
Digital and intelligent transformation is already the trend of the times. At the same time, the increasing risk of uncertainty in the world is also an important factor forcing enterprises and even the transformation of social intelligence. More importantly, the transformation of digital intelligence is also one of the key paths to accelerate green and low carbon. ZTE actively grasps major opportunities such as 5G, new infrastructure, digital and intelligent transformation, east and west computing, and dual carbon economy. As a deep participation in the construction of domestic 5G scale, it helps operators and partners build a digital intelligence base of "connection + computing power + capability" and accelerates digital transformation and upgrading. At the same time, it empowered the digital transformation of all walks of life, achieved a double increase in market pattern and share, and achieved revenue of 75.71 billion yuan in the operator sector for the whole year, an increase of 2.3% year-on-year.
In the future outlook, ZTE pointed out that in 2022, we usher in the opening year of the transcendence period, the domestic 5G in-depth advancement, the acceleration of industry application maturity, the emergence of a dual-carbon economy, the new infrastructure is in full swing, and the digital wave is unstoppable. As a road builder of the digital economy, we have the motivation and confidence to seize these new opportunities. In particular, in new businesses, we will strengthen digital transformation businesses such as 5G industry and automotive electronics, digital energy businesses, and smart home expansion, and become new engines of performance growth.
At last
5G will drive future innovation and economic development infrastructure, and the social benefits will be greater than ever, and many countries have also launched 5G commercial services. With the acceleration of the global 5G commercial process, supporting tens of billions and 100 billion massive Internet of Things devices to connect to the network, so that the Internet of Everything can be realized, and combined with new technologies such as artificial intelligence and cloud computing, it has promoted the transformation of the Internet of Everything to the intelligence of all things. It should be pointed out that in the 5G market, Huawei and ZTE have a pivotal position, and the two major communication giants are the main force in the construction of 5G in the mainland, helping enterprises to carry out digital transformation and innovation faster, while also harvesting this round of development opportunities.
Jianyong Yang, a contributor to Forbes China, is committed to in-depth interpretation of cutting-edge technologies such as the Internet of Things, cloud services and artificial intelligence.