Huawei Technologies is striving to sell off its x86 server business because of U.S. federal government policies that have pressured the business, Bloomberg reported.
The bigger picture: China-based Huawei in some countries faces server and network equipment bans; business contract restrictions; security scrutiny; and related pushback.
Numerous countries allege that the company’s products may purposely contain security holes that China’s government could use for spying purposes. Also, some countries allege that Huawei steals intellectual property from foreign technology companies. Huawei has repeatedly denied the claims.
Government Policies Pressure Huawei Supply Chain
The controversy and related government policies worldwide have pressured multiple portions of Huawei's business -- including the x86 server lineup. Among the challenges: Government pushback has made it difficult for Huawei to purchase processors from Intel, according to Reuters. Meanwhile, some IT consulting firms are busy helping U.S. service providers and government agencies to uninstall Huawei equipment from existing networks.
Further complicating matters, traditional x86 server sales are under pressure as public cloud service providers such as Amazon Web Services (AWS), Microsoft Azure and Google Cloud develop their own chips and build their own servers for some use cases.
Amid that backdrop, Huawei is in discussions to potentially sell the x86 server business. Interested firms may include Henan Information Industry Investment and an asset management company representing the Hubei provincial government, according to Bloomberg.
Global Server Revenue: Market Research
Huawei's server business will face pressure regardless of the owner. The evidence: Worldwide server market revenue was $23.6 billion in Q2 of 2021, down 2.5% compared to Q2 of 2020, according to IDC. The leading server companies for the period were Hewlett-Packard Enterprise (HPE, 15.7% market share) and Dell Technologies (15.6%), IDC indicated.
