Huawei’s European factory will improve supply chain efficiency, ease security concerns, analysts say
- Once up and running, the facility will produce 1 billion euros’ worth of products annually and directly create 500 jobs
- Huawei said it has secured 91 commercial 5G contracts worldwide, of which 47 are from European telecoms operators
Huawei Technologies’ plan to build a factory in France to produce 4G and 5G wireless equipment will help the Chinese company get its supply chains nearer telecommunications carriers in Europe, while limiting concerns over alleged spying for the Chinese government, according to analysts.
The Shenzhen-based company, the worlds’ No 1 telecoms equipment supplier, last Thursday announced it would invest more than 200 million euros (US$219 million) in the factory to meet the needs of its European customers even as the US has repeatedly warned allies not to allow the company into the continent’s 5G infrastructure.
This was the continuity of a long expansion plan in Europe, Huawei’s second-largest market after China, said Stéphane Téral, executive director of telecommunications research at IHS Markit.
“At this stage of the mobile industry, it is critical [for Huawei] to have a radio communications factory somewhere in Europe to relieve the pressure on the existing ones in China,” he said. “And we clearly see firsthand the disruption the coronavirus crisis is creating.”
The European facility will improve Huawei’s efficiency because the company will be able to integrate itself into the supply chain in Europe, said Peter Liu, vice-president at Gartner’s technology and service provider research group.
Huawei said it chose France for the factory because of the country’s ideal geographic position on the continent, mature industrial infrastructure and a highly educated labour pool.