Will Huawei Overtake Ericsson in R&D Investment?



Li Yingtao, the head of Huawei’s R&D has said that Huawei is in the plan to increase its investment on R&D and could outspend Swedish Ericsson, which is the world’s largest telecom equipment seller, this year.

He added that:”That ability depends mostly on innovation capacity. That’s why we will continue to increase our investments.”

Ericsson last week reported a drop in sales to US$15.25 billion during the first half of 2012, less than Huawei’s sales over the same period.

Huawei approximates 15 percent growth and improved operational efficiency for this year, and expects its 2012 profitability to match last year’s numbers.

The company spent US$4.9 billion in 2012 on research and development, but it is looking to increase that in order to convince customers that it isn’t just a vendor that competes on price, but also on quality.

“We are relatively optimistic about the company’s operating performance and profitability in the remaining days of this year,” said Huawei’s CFO Meng Wanzhou.

As mentioned earlier, both companies, Huawei and Ericsson have spent similar amounts in cash terms last year on research; around US$4.9 billion. However, a percentage of Huawei’s spending would have gone on handsets, which Ericsson no longer spends money on.

In terms of a percentage of revenues, Ericsson spent 14.4% of its revenues on research, compared to 13.7% by Huawei.