Huawei injects fresh capital into Shenzhen investment subsidiary as US-sanctioned tech giant returns to growth

With the capital infusion, subsidiary Shenzhen Habo Technology Investment Partners raised its registered capital to US$1.1 billion
That initiative could be a harbinger for Huawei’s increased pace of new investments this year, as the company’s sales rose in 2023

Huawei

Iris Dengin Shenzhen

Published: 9:30pm, 18 Mar 2024

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Huawei Technologies’ venture capital arm, Habo Investment, has injected fresh capital into a subsidiary, as the US-sanctioned telecommunications equipment giant resumes growth on the back of rising demand for its 5G smartphones and artificial intelligence (AI) chips.

With that infusion, Shenzhen Habo Technology Investment Partners – established in 2021 by Huawei and Habo Investment – last Thursday raised its registered capital to 7.98 billion yuan (US$1.1 billion) from 7 billion yuan previously, according to data from Chinese business registry platform Tianyancha.

Huawei did not immediately respond to a request for comment on Monday.

Privately held Huawei’s latest capital-injection initiative could be a harbinger for an increased pace of new investments this year, after the company estimated that 2023 sales were up 9 per cent year on year to 700 billion yuan amid high demand for its new 5G smartphones and various efforts to diversify its revenue streams.

An undated file photo shows signage for Huawei Technologies and venture capital arm Habo Investment. Photo: SCMP

Venture capital arm Habo made only nine deals last year, compared to a peak of 37 different investments made in 2021, according to a recent report by Chinese consultancy ITJuzi.

Habo last year focused on sectors that include semiconductors, enterprise services and new materials, ITJuzi data showed. Its investee companies included electronic design automation software provider Peifengtunan and Open Valley, a firm that promotes enterprise adoption of Huawei’s self-developed HarmonyOS mobile operating system.

Formed in 2019, Habo was initially tasked to help rebuild Huawei’s chip supply chain, after the world’s largest telecoms equipment maker and major Chinese smartphone vendor was added to a trade blacklist by Washington that restricted its access to advanced US technologies.

At the end of last year, Habo had made a total of 97 investments that primarily covered start-ups in the semiconductor industry, according to ITJuzi data. Its deal-making efforts have widened to include enterprise services and medical technology.

Huawei sees 9 per cent sales growth in 2023, boosted by Mate 60 Pro 5G comeback

Nearly four out of five deals by Habo were in the advanced manufacturing industry. One of its investee start-ups, photoresist company Fuyang Xinyihua Material Technology, became a unicorn with a valuation of more than US$1 billion.

Huawei has been riding high on its comeback in the high-end 5G handset market after last year’s launch of the Mate 60 Pro, which is powered by a home-grown advanced processor, the Kirin 9000s.

The Shenzhen-based company’s AI chip, the Ascend 910B, has emerged as a replacement for US firm Nvidia’s sought-after A100 graphics processing unit, which is banned for export to China.

The mainland’s venture capital sector struggled last year, as Chinese Big Tech companies from Alibaba Group Holding to Tencent Holdings slashed external investments owing to the nation’s shaky post-pandemic economic recovery, regulatory headwinds and geopolitical tensions. Alibaba owns the South China Morning Post.

Total investments made by internet giants Alibaba, Tencent and Baidu plunged by nearly 40 per cent year on year to 102 deals in 2023, ITJuzi data showed. Alibaba owns the South China Morning Post.