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Sanctions-Hit Huawei Ramps up Investment in Chinese Tech Sector

Sanctions-Hit Huawei Ramps up Investment in Chinese Tech Sector

Saturday, 10 October, 2020 - 08:15
FILE PHOTO: A Huawei company logo is pictured at the Shenzhen International Airport in Shenzhen, Guangdong province, China, July 22, 2019. REUTERS/Aly Song/File Photo

Huawei Technologies has built up stakes in Chinese semiconductor companies and other tech businesses as the world’s largest telecoms equipment maker bolsters its supply chain in the face of pressure from the United States.


Habo Investments, set up by Huawei in April 2019, has closed 17 deals for stakes in Chinese tech companies since August last year, public records show.


The investment arm was established in response to what Huawei’s rotating chairman, Guo Ping, last week described as “suppression” by the United States after escalating restrictions that have cut off Huawei’s supplies of many overseas chips and effectively barred it from building its own.


“Since Huawei is only one company, we use investment and technology to help our supply chain partners become mature,” he said.


The company has emerged as a focal point in deteriorating U.S.-China relations with President Donald Trump’s administration alleging that its equipment could be used by Beijing for spying, which the Chinese company has denied repeatedly.


Huawei’s investment push also coincides with ramped-up government efforts to boost China’s semiconductor sector, which still lags behind leading chip producers including the United States, South Korea and Taiwan.


While the investments might help Huawei in the future, analysts say they have done little so far to address the supply chain gaps that are undermining its once-booming smartphone business and could eventually threaten its core network equipment operations.


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


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


Vertilite, which was founded in 2015 and received an investment from Huawei this year, makes VCSEL sensors that support facial-recognition technology in cameras.


The company did not respond immediately to a request for comment, but one Vertilite investor said its sensors are used in a number of Huawei handsets.


However, many of the businesses Huawei has backed are at an early stage in their development, Reuters reported.


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


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