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Attendees stand at the Huawei Technologies booth at the Mobile World Congress event in Shanghai, which was held in June this year. Based in Shenzhen, Huawei is the world’s largest telecommunications equipment supplier and China’s biggest smartphone brand. Photo: Bloomberg

Huawei to raise minimum annual R&D spending to at least US$15 billion


Huawei Technologies, the world’s largest telecommunications equipment supplier, said on Thursday its annual research and development (R&D) spending will be increased to between US$15 billion and US$20 billion, as the company races to become a global leader in 5G technology.

Shenzhen-based Huawei, which previously pledged an annual R&D budget of US$10 billion to US$20 billion, spent 89.7 billion yuan (US$13.2 billion) on this operation last year, accounting for 14.9 per cent of its total revenue.

The company will dedicate 20 to 30 per cent of that updated R&D budget to basic science research, up from its previous expectation of 10 per cent, according to its statement.

The privately held firm, which is also the biggest smartphone supplier in China, is among the world’s top R&D spenders. and Alphabet, the two biggest spenders on R&D in the United States, invested US$22.6 billion and US$16.6 billion, respectively, in 2017, according to financial data company Factset.

About 80,000 of Huawei’s employees, or 45 per cent of its total workforce, are engaged in R&D, the company said on its website.

The increased spending comes as the US, Australia and Britain push back against Huawei’s network communications technology on security grounds amid increasing international political tensions.

A UK government report last week said technical and supply-chain issues with Huawei’s network equipment exposed Britain’s telecoms networks to security risks, reversing previous endorsement.

That added to an espionage debate as US and Australian politicians alleged Huawei facilitates Chinese government spying – an accusation that the company had repeatedly denied.

Huawei said on Thursday it intends to charge fair and reasonable rates for its 5G intellectual property to facilitate the adoption of the new mobile technology, which is expected to come into large-scale use in 2020.

Chinese companies led by Huawei are estimated to own about 10 per cent of the essential patents for 5G worldwide, a significant jump compared with their share in the 4G and 3G eras.

This article appeared in the South China Morning Post print edition as: More R&D spend