The days are long gone when the Chinese equipment makers competed on price rather than technological advances. Huawei and ZTE have become leaders in 4G-related innovation and in wireless patent filings, and the larger of the two now promises to outspend Ericsson in R&D spending in order to steal market share in future.
Huawei invested CNY30bn ($4.9bn) in overall R&D in 2012 and is boosting that budget in 2013 for both mobile and fixed equipment, as well as audiovisual platforms. Li Yingtao, the company’s head of R&D, said in an interview in Geneva that it would also look to cooperate more closely with operators on joint technology developments ‘ an approach which it commonly adopts in China, but less so elsewhere.
‘The bottom line when you talk to customers about building a network is that they will ask: ‘can you do it or not?” Li said (through a translator). ‘That ability depends mostly on innovation capacity. That’s why we will continue to increase our investments.’ He also says R&D must be firmly grounded in real problems, adding: ‘Today carriers don’t need a technological disruption, they need answers to their network problems. There’s still a long way to go to meet just standard needs.’
According to Bloomberg, net R&D investment by European technology vendors grew at its slowest rate for three years in 2012. Ericsson employs over 21,000 people in research, and its R&D spend last year was SKr32.8bn ($4.9bn), or 14.4% of sales. However, for the first time, this sum was almost matched by its Chinese rival’s investment, which amounted to 13.7% of sales, and the Swedish market leader has said its R&D outlay in 2013 will decrease ‘somewhat’.
‘Ericsson has been the technology leader in the industry for 137 years and remains committed to investing into this leadership,’ a spokesperson retorted to Bloomberg. Alcatel-Lucent has a €2bn ($2.6bn) R&D budget this year and CEO Michel Combes has said he will refocus that spending to focus only on high growth markets.
Li said Huawei was looking for academic and industrial research partners. The firm, with Samsung, is leading the UK’s ‘5G’ project at the University of Surrey and says it is in talks with Imperial College London about sharing a lab to study large-scale data crunching.