Huawei Technologies has put Chinese semiconductor companies and other tech businesses at stake as the world's largest telecommunications company strengthens its supply chain in the face of US pressure.
Public records show that Habo Investments,
which Huawei set up in April 2019, has closed 17 stocks of Chinese tech
companies since August last year.
Last week, Huawei's rotating chairman, Guo
Ping, described the investment process in response to the sanctions as
"pressure" on the United States following the increase in sanctions.
Many overseas have cut off supply of chips and effectively stopped it from
building.
"Because Huawei is just one company,
we use investment and technology to help our supply chain partners
mature," he said.
The company has been cited’ as a key point
in straining US-China relations with President Donald Trump's administration,
accusing it of using its equipment to spy on Beijing, which the Chinese company
has repeatedly denied.
Huawei's investment direction also
coincides with the government's large-scale efforts to boost China's
semiconductor sector, which still lags behind leading chip producers, including
the United States, South Korea and Taiwan.
Choosing chips
While the investment could help Huawei in
the future, analysts say it has done little to bridge the supply-chain gap that
has hurt its once-smartphone business. Delivering and may result in
compromising the operations of its core network equipment.
"It will take a long time," said
one Chinese chip investor. "But they don't have a lot of good options, so
they should turn to outside investment."
Huawei declined to comment on the
investment division's operations.
Most of Habo Investment's deals have been
with Chinese startups, some of which have become part of Huawei's supply chain.
Vertilite, founded in 2015 and funded by
Huawei this year, makes VCSEL sensors that support face recognition technology
in cameras.
The company did not immediately respond to
a request for comment, but a Vertilite investor said its sensors are used’ in
many Huawei handsets.
However, many of the businesses that Huawei
has supported are in the early stages of development.
"Most of these companies are small,
odd players who are good at their jobs, but they don't have to be globally
competitive," said Ivan Platonov, who is familiar with China's chip sector
at research firm Ecological Ocean.
For example, shoulder electronics make RF
filters that enable wireless communication but are not yet compatible with
advanced 5G phones.
Company spokesmen, who received
investments from Hobo in January, could not be reached’ outside business hours
on Monday.
3Pack, which has also received investment
from Habo this year, manufactures analog-to-digital converters (ADCs) used in
wireless network base stations.
U.S. players dominated that market share,
and 3Pack earned just 300 million yuan (43.99 million) last year, according to
its prospectus before listing in Shanghai's Star Market.
3Pack did not immediately respond to an
email request for comment.
Habo's portfolio includes companies
outside of Huawei's core telecom operations. Numerous investments in chips, raw
materials and battery technology companies indicate ambitions in self-driving
cars.
Late last month, it also stopped investing
in open source China, the Shenzhen-based business behind Gitee, a Chinese
competitor to US coding platform GitHub.
Getty did not immediately respond to an
e-mail request for comment.
The files show that Habo is usually at a
stake of 5-10%, although prices have not been’ disclosed.
Resting place
The recent investment signals a shift in
Huawei's pace and tactics, which has fueled such deals and focused on domestic
business rather than overseas companies.
For example, in 2013, Huawei acquired
Giant-based photonics company Calopia. The following year, he bought Newell, a
British company that makes chips for the Internet business.
A former Huawei employee said,
"Huawei likes to do its own research and development. So investing or
acquiring is just a last resort." Was gone, and that's why the trend was
towards American or European technology companies, "said a former Howie
who helped curb the achievement of goals.
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