Chinese Huawei telecommunications heavyweight turns

The rapid rise of low-cost giant telecommunications industry is worrying some global cellular operators.
Over the past two decades, the Chinese Huawei Technologies co. featured a competitive pricing strategy to become one of the world's largest suppliers of telecommunications equipment. Now, the firm is using its huge scale and financial capacity to invest in research, jumping ahead of its weakened rivals in important areas of technological race.
Huawei has increased by more than 25% its r & d spending in 2012, to $ 4.7 billion. That the positions right behind the Ericsson-the world's largest supplier, in revenue, telecommunications equipment and spent $ 4.8 billion on P&D last year-and far ahead of Alcatel-Lucent SA and Nokia Siemens Networks, Nokia's network equipment Corp. with Siemens AG.
The jump represents an achievement for Huawei, but emerges as the supply base of equipment that support the growing data traffic generated by devices like the iPhone, Apple Inc., is eroding, a trend that has alarmed the operators. The United States ' largest phone cannot use Huawei's services because of national security concerns and operators in Europe, where Huawei is more accepted, afraid of becoming too dependent on a single supplier.
The concern is that the weakened European suppliers are not able to make the necessary investments, turning the Huawei in one of the few sources of advanced telecommunications equipment.
"They not only reached the competitors, but also became a leader of the technology," says Joachim Horn, Director of technology and information from the Swedish Tele2 AB, which uses equipment from Huawei. "But, as an operator, we need more than one supplier. We do not want to give 100% of our business to Huawei ", he added.
In terms of revenues, Huawei is the second largest provider of telecommunications infrastructure in the world, as antennas and cellular transmitters. The company also has a growing manufacturing business of consumer electronics, such as smartphones, with which it hopes to win additional scale and a new source of revenue to help offset the weakness in the market of commercial equipment.
With a high of 8% in revenue and more than 30% in profit in 2012, Huawei presents a stark contrast with the rest of the shot down telecommunications equipment industry
The Ericsson earnings plummeted in 2012 and, last November, the Swedish company announced plans to cut about 10 percent of its workforce. Alcatel-Lucent is burning hundreds of millions of euros of your box every year. Already the Nokia Siemens Networks has improved its performance, but eliminated almost 25% of its workforce to cut costs.
Huawei can advance even further as operators install new high-speed networks and older technologies, which generated huge profits, begin to disappear. But the prospect of growth is limited. Global spending on mobile infrastructure operators fell 6.6% in 2012, to $ 77.3 billion, and should grow only 2.3% in 2013, according to Gartner Research.
"In the long run, this industry will only have space for three profitable companies," said the Chief Executive of Nokia Siemens, Rajeev Suri. "And it's getting increasingly clear who are the winners. The strong will get stronger. For me, this is the beginning of consolidation. "
Huawei continues investing heavily. She opened new research centers in Ireland and Finland and contends that research expenditures are part of a long-term strategy to make their technology stand out.
"Everybody is producing in China or in low-cost countries right now," said Renato Lombardi, an Executive of Huawei's research. "The competitiveness have to come from innovation."