Listed company Hengtong Optoelectronics was targeted after acquiring Huawei's subsidiaries and was blacklisted by the United States

Operator Finance Kang Zhao/Wen

Hengtong Optoelectronics, an optical fiber company with an annual revenue of tens of billions, has recently been in trouble. On the evening of December 16, the US Department of Commerce added 37 foreign institutions to the so-called "entity list", many of which were Hengtong Optoelectronics.

A number of Hengtong's submarine cable-related subsidiaries are included in the procurement blacklist of the US Department of Commerce, including Jiangsu Hengtong Marine Optical Network System Co., Ltd., Hengtong Optoelectronics, and Huahai Communications International. U.S. companies will be prohibited from selling parts or technology to listed companies.

This is mainly due to a deal between Hengtong Optoelectronics and Huawei two years ago. On the evening of March 9, 2019, Hengtong Optoelectronics announced that it had completed the transfer of 51% of the equity of Huawei Marine Network Co., Ltd., and Huawei Marine became a holding subsidiary of the company.

At that time, a person in charge of Hengtong Optoelectronics gleefully told the media that in the international submarine cable communication market of oligarchic competition, the participation of Chinese enterprises is expected to increase. Through the acquisition of Huawei Marine, Hengtong Optoelectronics has obtained more than 10 years of submarine cable construction experience and industrial chain resources accumulated by Huawei Marine, which will help rapidly expand its share in the submarine cable market. After that, Huawei was only the second largest shareholder of Huawei Marine, and its shareholding ratio dropped to 2.44%.

The Huawei ocean acquired by Hengtong Optoelectronics does have certain value, the submarine optical cable is one of the most important communication links for transnational Internet connections, and the transmission capacity and economy exceed the technical means such as satellite communication, which is the most important cross-continental communication technology at present. According to the TeleGeography report, more than 95% of the world's international data is transmitted through submarine cables.

There are 4 companies engaged in the construction of submarine cable communication networks in the world, of which 3 are foreign companies, including SubCom, Nokia/ASN, NEC, and one is China's Huawei Marine. Huawei Marine's global market share is 10% to 15%.

Submarine optical cable is the main transmission channel of the International Internet, the United States controls the submarine optical cable, it is very easy to monitor the Internet, steal confidential information, including e-mail, Internet telephone and so on. This may be an important reason why the United States has cracked down on Huawei Marine and its new shareholder Hengtong Optoelectronics. And Hengtong Optoelectronics also just caught up with this matter, and other businesses will definitely be affected.

(Editor-in-Charge: Han Li)