Huawei invests heavily in Chinese chip companies and spends billions of dollars to improve its self-development capabilities

According to the Wall Street Journal website recently reported that due to the obstruction of the United States, China's Huawei Technologies Co., Ltd. is difficult to buy many of the chips needed, so it is stepping up investment in companies competing to build China's semiconductor supply chain.

Before and after the U.S. government began imposing an export ban on Huawei in 2019, the Chinese tech giant launched a fund. At present, Huawei is investing in Chinese chip companies through the fund. According to data compiled by the U.S. capital markets research institute Project Proposal Data Company, the fund, called Hubble Technology Venture Capital Co., Ltd., has invested in 56 companies since its inception.

According to data from project proposal data firms and company records, the vast majority of Companies funded by Hubble are participants in the semiconductor supply chain. There are emerging companies in chip manufacturing and design, as well as companies that produce semiconductor materials, design software and chipset production equipment.

As a non-public company, Huawei does not disclose the size of the fund or answer questions about the fund, but according to the database that tracks the registration of Chinese companies, Huawei has invested tens of millions of dollars in some companies. With Hubble, Analysts say, Huawei can not only nurture current and future potential chip suppliers, but also reap potential financial returns as China's chip industry booms.

Other large Chinese electronics companies operate similar investment funds, including smartphone maker Xiaomi, OPPO and Lenovo Group. These funds have brought them similar benefits.

He Hui, head of Chinese semiconductor research at Omdia, a British technology research institute, said that the supply chain of the semiconductor industry is very long, and Huawei can get priority supply from this company by investing in a chip company, especially in the case of chip shortage.

Huawei CEO Ren Zhengfei told employees in August last year that Huawei needs more theoretical breakthroughs, especially in the fields of compound semiconductors and materials science.

"Now that Japan and the United States are basically leading, we need to use the platform of globalization to create our own success," he said. ”

China has made achieving self-sufficiency in chip technology a top national priority, a move that has become increasingly important.

From January to early December 2021, Chinese chip companies raised $26.5 billion through public offerings, private placements and asset sales, up 9% year-on-year, according to data from S&P Global Markets, Finance intelligence in the United States.

By the standards of the capital-intensive chip industry, Huawei's investment scale is relatively small. Analysts say Huawei still has a long way to go to achieve semiconductor self-sufficiency. However, China's chip boom has given hubble funds plenty of targets to invest in. The fund is led by Bai Yi, a longtime Huawei executive. In the early 2000s, Huawei's early efforts to sell equipment to U.S. telecom operators were not smooth, and Bai Yi was one of the first staff members the company sent to the United States at that time.

One of Hubble's most recent investments was in early December 2021 when it took a stake in Suzhou Jingtuo Semiconductor Technology Co., Ltd. The latter is a specialist semiconductor equipment manufacturer based in Suzhou, China, that manufactures equipment used to keep chip components clean during the manufacturing process. According to the information on the website of Jingtuo Semiconductor, the company has contributed to the localization of semiconductor equipment in China.

Last August, Hubble invested about $46 million in Xuzhou Bokang Information Chemicals Co., Ltd., one of China's largest manufacturers of photoresists, a key semiconductor material.

In June last year, Hubble invested $1.5 million in Beijing KeyiHongyuan Optoelectronic Technology Co., Ltd., which produces high-power laser equipment for chip manufacturing.

Jingtuo Semiconductor declined to comment. As of the time of the report, Xuzhou Bokang and Keyihongyuan had not responded to requests for comment from US media.

Over the years, Huawei has spent billions of dollars to improve its chip self-development capabilities, gradually replacing foreign-designed chips in the fields of its smartphones, servers and communication equipment. In recent years, Huawei's smartphone and server chips have been regarded by analysts and industry executives as one of the world's most advanced process chips.

But Huawei's chips were previously produced by external manufacturers such as TSMC, and the restrictions imposed on Huawei in the United States in 2020 prevented many companies such as TSMC from making chips for Huawei.

Huawei executives said the company had not laid off any chip engineers and that Huawei employees were designing next-generation products, though major semiconductor manufacturers were still blocked from producing them.

Chen Lifang, Huawei's head of public affairs, said in June that employees were still working. She said Huawei is confident of overcoming these difficulties in the next two or three years. (Compilation /Xu Yanhong)

Source: Reference News Network