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Huawei exec who turned the Chinese firm into smartphone giant takes the reins at the cloud and A.I. unit

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Key Points
  • Richard Yu, head of Huawei's smartphone business, has been named to also lead the company's young cloud and artificial intelligence unit.
  • Yu turned Huawei into a company that designed and made phones for other brands into one of the world's top smartphone vendors in just a few years.
  • Huawei's smartphone business has been in decline due to U.S. sanctions.
  • Yu will be tasked with deciding what comes next for Huawei's smartphone business but also trying to turn the company into a cloud computing and artificial intelligence giant.
Richard Yu (Yu Chengdong), head of Huawei's consumer business, speaks during the presentation of a Kirin 990 5G chip set at the international electronics and innovation fair IFA in Berlin on September 6, 2019.
Tobias Schwarz | AFP | Getty Images

GUANGZHOU, China — Richard Yu, head of Huawei's smartphone business, has been selected to also lead the company's young cloud and artificial intelligence unit, a source with direct knowledge of the matter told CNBC, just as the handset division faces an uncertain future.

Yu turned Huawei into a company that designed and made phones for other brands into one of the world's top smartphone vendors in just a few years. After a brief time as the top smartphone maker in the world, Huawei's handset business has been in decline due to U.S. sanctions.

The executive, who has been at Huawei for nearly three decades, will start his post as head of the cloud and AI business on Feb. 7, the source said.

Neither Huawei nor Yu was immediately available for comment.

Moving a successful veteran to this business unit, which was created last year, highlights the areas where Huawei sees its future as some of its businesses, in particular smartphones, continue to feel the heat from U.S. pressure.

"Richard has a proven track record in Huawei from various posts. I believe there will be greater synergy between smartphones and cloud computing with him onboard with additional responsibility," said the source, who was not authorized to speak publicly.

Yu's appointment comes at a time of flux for Huawei. He will be tasked with deciding what comes next for Huawei's smartphone business but also with trying to turn the company into a cloud computing and artificial intelligence giant, competing with rivals such as Alibaba, Tencent and Baidu.

Smartphone troubles

Under the Trump administration, Huawei was labeled a national security threat. Washington alleged the company's networking equipment could be used by Beijing to spy on Americans. Huawei repeatedly denied allegations that it poses a national security threat.

But Washington hit the company with a number of sanctions. In 2019, Huawei was put on a U.S. blacklist called the Entity List, which restricted American firms from exporting certain software and components to the company. This led to Google cutting ties and stopping Huawei from using a licensed version of its Android mobile operating system.

The U.S. also moved to cut Huawei off from key chip supplies.

As a result, Huawei has seen its smartphone market share plunge outside of China, effectively slowing its growing business. Huawei's consumer division, which includes smartphones, was its biggest by revenue in 2019.

Huawei was forced to sell off its budget smartphone brand Honor in November in order for that to survive, though it is no longer owned by the Chinese tech giant. And on Monday, Reuters reported that Huawei is in talks to sell its premium Mate and P brands of smartphones. Huawei said there "is no merit to these rumors" and that it remains "fully committed" to the smartphone business.