Chinese technology giant Huawei Technologies has been making headlines for quite some time, becoming a focal point of the U.S.-China trade tensions. With the U.S. banning the Government agencies and contractors from using Huawei and ZTE technology, according to the Defense Authorization Act, the Chinese company has dealt with a major blow.
Back in May 2019, Donald Trump administration officially added Huawei to the trade blacklist. This restriction made it extremely difficult for the Chinese telecom giant to do business with the U.S. companies. Huawei now faces numerous supply chain, chip and software partner challenges due to the new U.S regulations against the company.
Several technology companies like Google, Intel, Qualcomm, Xilinx, Broadcom and others are cutting supplies to Huawei.
Now, to save its business, Huawei Technologies is building up stakes in the Chinese semiconductor companies and other technology businesses. This move comes in a bid to relocate and revive its supply chain that has been affected severely due to the ban in the U.S.
What went wrong for Huawei
Numerous countries across the world have alleged that Huawei’s products and technology may purposely contain security holes that the Chinese Government could use for spying purposes on those countries. Also, several countries have alleged that Huawei steals intellectual properties from foreign technology companies.
So far, Huawei has been alleged to be a tool for the Chinese Government for establishing global dominance.
The Chinese technology company is a front runner for the 5G technology developing process. Due to the allegations of intellectual property stealing against it, Huawei has been facing product and 5G wireless network project bans, business contract restrictions, tighter security scrutiny; leading to a major blow to the world’s largest telecom company.
Huawei has denied these allegations repeatedly though.
However, several countries across the world have ruled out the possibility of a ban on the company and confirmed Huawei as the choice for 5G wireless network projects and associated infrastructure as well.
Huawei’s homeland bid to save business
Huawei set up Habo Investments back in April 2019, during the trade turmoil it was facing in the U.S. The investment arm has already secured 17 deals to purchase stakes in various Chinese technology companies. As public records reveal, these deals have been secured between August 2019 and September 2020.
The investment arm was formed in order to relocate the supply chain for the overseas chips that were cut off after the ban by the United States Government. Huawei wanted to build its own supply chain network instead of relying on other companies.
The focus on fresh investments also comes as the Chinese Government is ramping up its effort to boost the country’s semiconductor sector. China’s semiconductor industry still lags behind the peers like United States, South Korea and Taiwan.
Another reason behind Huawei’s recent refocusing strategy that emphasises on ramping up domestic business in China instead of overseas companies is that the tech giant aims to do its own R&D.
Chips are the choice
Most of the investments the Habo Investments have made are in the chip-related Chinee startups. Some of them have already become part of Huawei’s supply chain as well.
For example, Habo Investments has invested in Vertilite, a company formed in 2015 and makes VCSEL sensors that support facial-recognition technology in cameras. A number of Huawei handsets use the Vertilite’s VCSEL sensors.
Another company Shoulder Electronics that makes RF filters enabling wireless communications has received Huawei’s investment. But the company is yet to achieve compatibility for advanced 5G phones Huawei is planning to make and sell in the global market.
3Peak is another company, which received Huawei’s investment through Habo Investments earlier in 2020. This company makes analogue-to-digital converters (ADC), which are used in wireless network base stations. The U.S. companies currently dominate this segment. According to an official release by 3Peak, it generated 300 million yuan ($43.99 million) revenue in 2019, which is considered.
In late August 2020, Habo Investments also invested in Open Source China, a company that works in the coding business.
Besides the chip manufacturing companies, Habo Investments have also invested in raw materials and battery technology firms. These could be related to Huawei’s ambition to venture into the self-driving car business. The investment arm of Huawei usually acquires around 5-10% of stakes in the companies.
So far, the industry experts believe that these investments might help the Chinese tech giant in long run. But they also say that these investments have addressed little so far to solve the supply chain gaps Huawei is facing due to the ban in the U.S.
Also Read: Cyber warfare: Pakistani hackers getting Chinese help to launch cyber attacks on India
