Huawei Technologies ramps up investment in its home country

Huawei Technologies

Huawei Technologies has built up stakes in various Chinese semiconductor companies and other tech businesses as the world’s biggest telecoms equipment manufacturer bolsters its distribution chain in the face of pressure from western nations.

Habo Investments, set up by Huawei back in April of 2019, has closed some 17 deals for bets in Chinese technology businesses since August last year, public records show.

The investment arm was set in response to what Huawei’s rotating chairman, Guo Ping, last week called “suppression” by the US after escalating constraints that have cut Huawei’s supplies of many overseas chips and effectively scraped it from building its own.

The company has emerged as a focus in deteriorating US-China connections with President Trump’s administration alleging that its equipment could be used by Beijing for spying, and that the Chinese firm has denied repeatedly.

Huawei’s investment drive also coincides with ramped-up government attempts to boost China’s semiconductor industry, which still lags behind major chip producers including the US, South Korea and Taiwan.

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CHASING CHIPS

Though the investments might assist Huawei in the future, analysts say they have done little so far to address the supply chain openings which are endangering its once-booming smartphone industry and could eventually threaten its core system gear operations.

“It will take a long time,” said a Chinese chip investor. “But they don’t have many good options, so they must turn to investing outside.”

Huawei declined to comment on the investment branch’s operations.

Most of Habo Investment’s deals happen to be in chip-related Chinese start-ups, a few of which have become a part of Huawei’s supply chain.

Vertilite, that was set up in 2015 and received an investment in Huawei this year, makes VCSEL sensors that encourage facial-recognition engineering in cameras.

The company didn’t respond instantly to a request for comment, but one Vertilite investor said its sensors are employed in many of Huawei handsets.

However, a number of the businesses Huawei has endorsed are in an early phase in their development.

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“Most of these companies are small, niche players who are good at what they do, but they are not necessarily globally competitive,” explained Ivan Platonov, who tracks China’s chip sector at research vendor EqualOcean.

Shoulder Electronics, for instance, makes RF filters that enable wireless communications but has yet to achieve compatibility for innovative 5G phones.

A spokesman for the company, that received investment in Habo in January, could not be attained outside business hours on Monday.

3Peak, which also received investment from Habo this season, makes analogue-to-digital converters (ADC) used in wireless network base stations.

US players dominate market segment and 3Peak generated only 300 million yuan (approximately $43.99 million) in revenue this past year, according to a prospectus it issued before record on Shanghai’s STAR market.

3Peak didn’t respond instantly to an emailed request for comment.

Habo’s portfolio also has businesses outside Huawei’s heart telecoms operations. Many investments in processors, raw materials and battery technology companies point to ambitions in self-driving automobiles.

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Late last month it also closed an investment in Open Source China, a Shenzhen-based business behind Gitee, a Chinese rival to US programming platform GitHub.

Gitee didn’t respond immediately to an emailed request for comment.

Habo typically acquires bets of 5-10%, figures reveal, though valuations have never been disclosed.

CHANGE OF PACE

The current investments mark a change in rate and strategies for Huawei, ramping up the frequency of these deals and refocusing on national businesses rather than overseas companies.

In 2013, for example, Huawei acquired Ghent-based photonics firm Calopia. The following year it bought Neul, a UK-based maker of chips for the internet-of-things sector.

The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Jonathan Landay. Editing by Steve Orlofsky.

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