SHANGHAI (Reuters) – 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.
FILE PHOTO: The logo of the Huawei Technologies Co. Ltd. is seen outside its headquarters in Shenzhen, Guangdong province, April 17, 2012. REUTERS/Tyrone Siu
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.
CHASING CHIPS
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.”
Huawei declined to comment on the investment division’s operations.
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.
“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.
Shoulder Electronics, for example, makes RF filters that enable wireless communications but has yet to achieve compatibility for advanced 5G phones.
A spokesman for the company, which received investment from Habo in January, could not be reached outside business hours on Monday.
3Peak, which also received investment from Habo this year, makes analogue-to-digital converters (ADC) used in wireless network base stations.
U.S. players dominate that market segment and 3Peak generated only 300 million yuan ($43.99 million) in revenue last year, according to a prospectus it issued before listing on Shanghai’s STAR market.
3Peak did not respond immediately to an emailed request for comment.
Habo’s portfolio also includes companies outside Huawei’s core telecoms operations. Several investments in chips, raw materials and battery technology companies point to ambitions in self-driving cars.
Late last month it also closed an investment in Open Source China, a Shenzhen-based business behind Gitee, a Chinese rival to U.S. coding platform GitHub.
Gitee did not respond immediately to an emailed request for comment.
Habo typically acquires stakes of 5-10%, filings show, though valuations have not been disclosed.
CHANGE OF PACE
The recent investments mark a change in pace and tactics for Huawei, ramping up the frequency of such deals and refocusing on domestic businesses rather than overseas companies.
In 2013, for example, Huawei acquired Ghent-based photonics company Calopia. The following year it purchased Neul, a British maker of chips for the internet-of-things sector.
“Huawei likes to do its own R&D. So investment or acquisition was done only as a last resort, and that was why it tended to be towards U.S. or European technology companies,” said one former Huawei staffer who helped to scout acquisition targets.
Reporting by Josh Horwitz; Editing by Jonathan Weber and David Goodman
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
