Huawei the Hydra

House of Huawei: The Secret History of China’s Most Powerful Company
By Eva Dou
Portfolio, 2025

Last February, in a performance designed to showcase Beijing’s support for private-sector innovation, China’s tech titans gathered for a high-profile meeting with President Xi Jinping. In attendance was a “who’s who” of China’s leading technology companies, including the founders of DeepSeek, BYD, Tencent, and Alibaba. As observers pored over the seating arrangement, looking to see who might be favored by China’s top leaders, few were surprised by the person who occupied the most prominent seat. Front and center sat Ren Zhengfei, the founder and CEO of Huawei.

Today, Huawei is among the most powerful companies in China. Founded in Shenzhen in 1987 as a small supplier of telephone switches, it has over the years transformed into a globe-spanning giant, making over $100 billion a year selling everything from 5G infrastructure and video conferencing equipment to smartphones and smart watches. It is a key firm in Beijing’s Digital Silk Road Initiative, which is developing digital infrastructure around the world using Chinese technology. A partial subsidiary is currently connecting three continents with undersea cables, and now Huawei is providing the semiconductor chips and digital systems that drive China’s booming artificial intelligence and electric vehicle industries.

The story of how this firm rose to its place of prominence is the subject of Eva Dou’s newly published House of Huawei. A technology reporter for the Washington Post, Dou draws on a vast array of sources, from interviews with former Huawei executives and internal corporate documents, to Ren Zhengfei’s own personal writings. The firm’s notoriously secretive culture meant restricted access to many official documents, but despite these limitations Dou has produced an authoritative and richly drawn account of a company that has become emblematic of China’s emergence as a technological powerhouse and a flashpoint in US-China relations.

Building a telecom army

Huawei’s emergence comes in the context of China’s broader efforts to patch up the country’s technological vulnerabilities and reduce its reliance on foreign powers. Wave after wave of Chinese industrial policy initiatives—from the 863 Science and Technology Program of the 1980s to Made in China 2025—have aimed to make China self-reliant for the so-called core technologies (核心技术) that underpin its economic development and national security.

In the 1980s, that core technology was telecommunications equipment. As China’s economy began to take off, Chinese political leaders saw their dependence on foreign telecommunications equipment as a critical threat to the country’s technological sovereignty. At the time, China relied completely on imported equipment from foreign companies like Ericsson, Nokia, and Siemens. In addition to costing a fortune in foreign currency reserves, relying on foreign equipment meant giving up control over a fundamental part of China’s modern infrastructure. Huawei’s founder Ren Zhengfei famously told Chinese President Jiang Zemin: “A country without its own program-controlled switches is like one without an army.”¹

To acquire foreign technology and develop its own telecom industry, China used the promise of its vast and growing domestic market to actively bring in foreign equipment makers and have them form joint ventures with Chinese firms. The exchange of market access for foreign technology (市场换技术) began in China’s auto sector and would become a signature industrial policy strategy across many sectors for the subsequent decades. In 1984, Shanghai Bell was established as the first of these telecom equipment joint ventures, formed as a partnership with the Bell Telephone Manufacturing Company, a Belgium-based offshoot of Alexander Graham Bell’s original company. Other joint ventures with foreign companies soon followed, and by the 1990s China had successfully shifted from importing telecom equipment to producing most of it domestically through these joint ventures.²

Though its name is hardly known today, Shanghai Bell played a foundational role in China’s telecom development, not only bringing in core technology but perhaps even more importantly training a generation of Chinese scientists and engineers. A consortium of Chinese research groups, including an engineering institute under the People’s Liberation Army, carefully studied the Shanghai Bell’s technology and used it to develop China’s first domestically designed digital switches. A new state-owned company called Great Dragon was formed to commercialize these new Chinese switches. And it was Great Dragon, not Huawei, that was originally anointed China’s national champion for telecom equipment.

Fortunately for China’s telecom industry, Beijing didn’t put all its eggs in one basket. Great Dragon was one of four major Chinese equipment makers that also included Huawei, ZTE, and Datang. These four Chinese companies all benefited from the broader diffusion of technology through Shanghai Bell and raced to win market share across China as the country rapidly installed new telecom infrastructure. In an existential calamity for Great Dragon, its switches ran into software problems that basically knocked it out of the race.

Had Beijing simply given Great Dragon a monopoly over China’s telecom equipment, this would have been a disaster for the entire country. But China had deliberately created space for multiple strong competitors to emerge so that the industry overall would continue to make progress.³ Over time, China would use this strategy of “managed competition” in a range of industries, from the automotive sector to high-speed rail. Rather than creating a single state monopoly or simply leaving things to market forces, China would try to get the best of both worlds by honing a few key industry players and letting them compete in a supervised setting.

The rise of a national champion

As Dou makes clear, Huawei’s emergence as China’s national champion is in no small part thanks to the hard-charging, military-style ethos cultivated at Huawei by its founder Ren Zhengfei. Born to a rural family in a remote mountainous town in Guizhou province in 1944, Ren graduated in 1963 from the Chongqing Institute of Civil Engineering and Architecture. In 1974 the People’s Liberation Army, strapped for engineers, put him in the Engineering Corps, despite the fact that he had never joined the Communist Youth League as a student. Rising quickly through the ranks whilst identifying as an outsider, he and some friends eventually set up Huawei as a third-party re-seller of telecom devices in Shenzhen. That was in 1987, and Ren pushed the company to quickly move up the value chain, emulating other companies’ products until, in the early 1990s, Huawei was producing its own designs.

As the company took off, Ren created a fiercely competitive environment for his sales staff, which became known as “wolf culture.” He would organize “mass resignation” events where each sales manager had to write both a sales report and a resignation letter; it was up to Ren to accept either one or the other—an approach Elon Musk would likely admire. Ren invested heavily in research and development, luring top scientists and engineers with generous pay and a chance to work on state-of-the-art technology. Huawei engineers were known for working long hours, in some cases bringing in mattresses to sleep in the office. Ren made nationalism a key motivating force for the company and appealed to national leaders like Jiang Zemin, Hu Jintao, and now Xi Jinping.

Huawei also benefited from international cooperation, setting up more than twenty research and development centers across the US and Europe, and sponsoring research collaborations with universities around the world.⁴ It partnered with leading foreign companies—Nortel, Nokia, and Motorola among others—while, at the same time, Huawei was frequently accused of intellectual property theft from its competitors. One landmark case brought by Cisco claimed that Huawei’s software had the same bugs as Cisco’s source code and that portions of Cisco’s technical manuals had been copied directly. Desperate for options during the lawsuit, Ren considered selling Huawei to Motorola. Taken together, the factors that drove Huawei’s success—relentless ambition, global partnerships, and controversial tactics—were many of the same ones behind China’s technological and industrial ascent over the same period.

Huawei’s global expansion mirrored—and indeed spearheaded—China’s own emergence on the world stage. First, it obtained a foothold in countries that were viewed warily by the West, such as Iraq and Iran. From there, Huawei steadily expanded to other countries, beating out Western competitors on cost with support from Beijing. China Development Bank created a $10 billion credit line to finance Huawei equipment abroad, and Chinese leaders such as President Hu Jintao personally attended some of Huawei’s deal-signing ceremonies with foreign leaders.

The firm’s international rise reached a tipping point in 2005 when the UK agreed to install its telecom equipment. This “broke open the dam into the West” and, in Dou’s description, allowed Huawei to reach “not just individual countries but entire continents.”⁵ By 2015, Huawei supplied half of Europe’s 4G equipment. By 2020, it had become the world’s bestselling smartphone maker. Huawei—and with it, China—had finally won the international trust and respect they had long sought.

But there were reasons for growing mistrust. American suspicions of Huawei began as far back as the early 2000s when the US questioned whether its infrastructure projects in Iraq had violated UN sanctions.⁶ In 2011, Huawei sold systems to Iran that allowed its police to track cell phone locations, causing more distrust. In 2012, Huawei and ZTE executives were questioned before the US House Intelligence Committee, which later concluded that both companies posed a risk to American national security. A 2017 report found that data from the African Union’s Chinese-built, Huawei-equipped headquarters had been secretly flowing back to China for years. In 2018, Australia became the first country to explicitly ban Huawei and ZTE from building its 5G infrastructure. Reports in 2020 and 2021 found that Huawei had developed sophisticated surveillance systems for use in Xinjiang and, later, in other parts of China.

At a UK parliamentary hearing, Huawei’s head of cybersecurity said the company’s telecom equipment did indeed track cellphone location data because that was simply how modern cell technology worked. “Huawei’s equipment is no different from anyone else’s equipment,” he argued.⁷ The great irony was that the American National Security Agency (NSA) itself had hacked into Huawei’s servers in Shenzhen and sought to use Huawei equipment to spy on other countries, as revealed by the Edward Snowden leaks.

Huawei under fire

It was on May 15, 2019, that Huawei received news that every prominent Chinese tech company has come to dread: it had been placed on the US Department of Commerce’s infamous “Entity List.” The blacklisting, meted out under the first Trump administration, dealt a devastating blow to Huawei, cutting it off from the American chips and software that powered its smartphones, including Google’s Android operating system. In response, Ren Zhengfei decided to sell off Huawei’s popular Honor smartphone unit in 2020. The sale was made for $15 billion but Huawei’s revenue the next year fell by 27 percent.

These were followed by escalating sanctions that ultimately blocked Huawei from using Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading chipmaker. Huawei’s smartphone business went into a tailspin, and many wondered whether Huawei would survive. Throughout all this, Meng Wanzhou, Huawei’s CFO and Ren Zhengfei’s daughter, was under house arrest in Canada as the US pursued charges against her for allegedly violating sanctions on Iran. Public opinion in Canada was split over whether Meng Wanzhou should have been arrested and the controversy only deepened when President Trump suggested Meng was a bargaining chip in negotiating a trade deal with China.

Under pressure on multiple fronts, Ren Zhengfei put Huawei into war mode. His firm had spent billions of dollars stockpiling enough semiconductor chips to last for two years; HiSilicon, Huawei’s chip design unit, had been working for years to develop “spare tires” in case Huawei lost access to foreign chips.⁸ And now Huawei threw the full weight of its formidable R&D capabilities into developing its own chips and operating system. What had previously been a backup plan transformed overnight into Huawei’s top priority. To inspire his staff, Ren circulated an image of a World War II-era Soviet bomber continuing to fly after suffering heavy damage.⁹

US-China tech war

Putting Huawei on the Entity List was not just an attack on Ren’s company but the declaration of a tech war against China. It was waged first by Trump, and escalated under Biden, by way of the sanctions aimed at the heart of China’s economy: semiconductor chips. The US cut China off not only from advanced semiconductor chips—including the most powerful versions of Nvidia’s GPUs—but also from the very tools China needed to make its own high-end chips, such as state-of-the-art lithography machines from the Netherlands’ ASML. The fight to restrict Chinese access to semiconductors took on an existential dimension in US politics. Just before the release of ChatGPT in November 2022, US National Security Advisor Jake Sullivan gave a speech arguing that the US “must maintain as large of a lead as possible.”

Now, after struggling for decades to catch up, China’s chip industry has been jolted into action by multiple waves of sanctions and the threat of more on the way. Huawei has been tasked by the government with leading a Manhattan project to make China’s entire semiconductor supply chain self-sufficient. To that end, it has been deploying special task forces of its engineers and managers to help Chinese semiconductor companies across the supply chain solve production challenges. And the company has invested heavily in two massive R&D facilities in Shanghai and Shenzhen, which are working around the clock to develop chipmaking equipment that can replace ASML’s cutting-edge EUV lithography machines now blocked by the Netherlands. Huawei’s existential imperative to harden itself against sanctions has aligned perfectly with that of China’s.

Huawei the Hydra

Less than five years after Trump’s sanctions, Huawei shocked the world with a new product. In August 2023, Huawei launched a new 5G smartphone called the Mate 60 Pro that used Chinese advanced processor chips in defiance of US efforts to hold back China’s chip industry. Then, in December 2024, Huawei launched a fully in-house version of its smartphone operating system called HarmonyOS Next. Huawei’s AI chips are now being used widely by Chinese AI companies, providing an alternative to export-controlled GPUs from Nvidia. As a result of Huawei’s progress, Ren Zhengfei recently told President Xi that concerns over China’s “lack of core and soul” (缺芯少魂)—meaning, lack of domestically-made semiconductors and operating systems—had eased.

Huawei’s unexpected advances combined with DeepSeek’s stunning breakthroughs in AI have raised questions about whether restricting China’s access to technology may have ultimately backfired. Did forcing China to become self-reliant accelerate China’s technological development rather than hinder it? Is the US, as a result, now falling behind? These questions among others are left unaddressed by Dou, but the intricate reporting in House of Huawei sheds much needed light on this all important company in contemporary US-China relations and beyond.

In a recent speech, China’s Foreign Minister Wang Yi pushed back on US sanctions, saying: “Where there is a blockade, there are breakthroughs; where there is suppression, there is innovation.” Huawei and its high-caliber army of engineers and scientists may have been a crucial variable that these policies had overlooked. Now, with Trump back in the White House and US-China tensions heating up, China will need Huawei more than ever, its champion of national champions.