Huawei has taken a stake in a state-owned wireless testing company – its latest attempt to strengthen domestic sourcing in the face of US sanctions.
The vendor has invested 66 million yuan (US$9.3 million) for an 8% holding in China Electronics Technology Instruments Co (CETI), a subsidiary of the giant China Electronics Technology Group (CETC) conglomerate.
Seven other companies, including several CECT-linked groups, have also invested, such as the CETC 41st Research Institute (10%), CETC Investment Holdings (8.82%) and the Hefei-CECT Guoyuan Industrial Fund Partnership (8%).
Huawei has not made any public announcement about the new investment and did not respond to a Light Reading request for comment.
But local analysts say it is an effort by Huawei to hedge against the US campaign to sideline it.
China has a number of small test and measurement firms, but the segment is dominated by non-Chinese companies such as Rohde & Schwarz, Keysight and Anritsu.
As local website C114 observed, testing "has long been the weak link in China's communications industry," and while Huawei is continuing to work with foreign test companies, "it must also focus on the development of some local Chinese test partners."
CETI says it has been working on 5G testing since 2013 and can test 5G chips, modules, devices and basestations and offer customized IoT testing for verticals.
It also has IP covering high-end and low-end instruments and components, and automatic test solutions.
As a privately held company, CETI doesn't disclose its financial results but last year reported an increase in sales and profit of more than 25%. Its 2020 target is to achieve revenue of 3.4 billion yuan ($479 million) and net profit of 319 million yuan ($45 million), Beijing News reported.
CETI's eight new shareholders now own 50.54% of the business, which has expanded its registered capital from 500 million yuan ($70.5 million) to 826 million yuan ($116 million).
CETI's parent, CETC, is one of China's biggest defense electronics contractors, with sales topping 188 billion yuan ($26.5 billion) in 2016, the last year for which data is available.
Among its 42 subsidiaries is controversial video surveillance firm Hikvision, which was last year banned from US government contracts because of its surveillance business in Xinjiang.
— Robert Clark, contributing editor, special to Light Reading