Chinese smartphone maker Meizu secures new financing that values it at 30 billion yuan

PUBLISHED : Monday, 24 October, 2016, 7:57pm
UPDATED : Monday, 24 October, 2016, 10:54pm

Meizu, a Chinese smartphone maker backed by Alibaba, is set to secure more than 536 million yuan of new financing from several domestic investors, valuing the company at around 30.5 billion yuan.

Telling Telecommunication Holding Co, which is listed on the Shenzhen stock exchange, said last week it would invest 200 million yuan in Meizu in return for a 0.655 per cent stake in the smartphone maker.

As well as Telling Telecommunication, three other Chinese companies – Xiutong Investment Management Centre, Yuan Ke(Pingtan)Investment Fund and a Xinjiang-based investment company – plan to take minority stakes in Meizu, bringing the total amount injected by the four investors to over 536.67 million yuan, according to a report by Shanghai-based International Finance News. After the latest investments, the smartphone company will be valued at around 30.5 billion yuan.

According to the report, Meizu lost 1.037 billion yuan in 2015 and 304 million yuan in the first six months of this year.

Founded in 2007, Meizu is one of a growing number of Chinese suppliers selling smartphones based on either the ubiquitous Android operating system or Alibaba Group’s YunOS mobile platform.

E-commerce giant Alibaba, which owns the South China Morning Post, bought an undisclosed stake in privately held Meizu for US$590 million early last year, paving the way for Meizu to use Alibaba’s operating system. Meizu was valued at about US$ 2 billion at the time, mainland media reported.

Meizu revealed it sold 20 million smartphones in 2015, but has offered no official figure for shipments for 2016. Research firm IHS Technology said in a report that for the second quarter of this year the top-eight smartphone brands in mainland China, the world’s biggest smartphone market, were Huawei, Oppo, Vivo, Xiaomi, ZTE, Lenovo, TCL and Leshi.

Meizu is still entangled in a patent-infringement lawsuit initiated by US chipmaker Qualcomm in the Beijing Intellectual Property Court in June.

Mainland media has reported that Qualcomm, the world’s largest maker of chips for mobile phones, asked the court for 520 million yuan in compensation from Meizu.

The US company pointed out that more than 100 other companies, including the largest Chinese mobile device suppliers, have accepted its 3G and 4G patent license deals.

Meizu’s vice-president Li Nan said at a press briefing in Beijing last year that Qualcomm was not being transparent with those deals in mainland China.

“We need to see those other patent-licensing agreements so we can determine if the [proposed] deal with Meizu is fair,” Li said at the time.

On October 15 Qualcomm announced on its website that it had expanded action against Meizu in the US, Germany and France. These actions included filing a complaint with the US International Trade Commission (ITC), filing a patent infringement action in Germany with the Mannheim Regional Court, and initiating an infringement-seizure action in France to obtain evidence for a possible future infringement action in that country, Qualcomm said.