Huawei emerges as major stakeholder in TD Tech.

Huawei emerges as major stakeholder in TD Tech. Source: Shutterstock

Huawei’s TD Tech shake-up: Nokia sells majority stake

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  • The journey of TD Tech from a 2005 joint venture with Siemens, Huawei, and later Nokia has shifted focus.
  • Nokia’s exit marks a new telecom era.
  • Once challenged, Nokia’s 51% TD Tech stake sale resurfaced with Huawei and the state-owned consortium as new buyers.

In the dynamic telecommunications landscape, TD Tech stands as a testament to the intricate interplay of collaboration, evolution, and strategic partnerships. Established in 2005 as a joint venture between Siemens (51% stake) and Huawei (49% stake), TD Tech found its roots in the shared vision of pioneering wireless technology solutions. However, the landscape shifted in 2007 when Siemens sold half of its stake to Nokia, introducing a new player to the collaborative equation. 

That marked a pivotal moment, steering TD Tech on a new trajectory under joint ownership. Siemens gradually divested its remaining shares in 2013, leaving Nokia as the major shareholder in TD Tech. This strategic move altered the company’s ownership structure and set the stage for further developments in its market presence and product offerings.

A notable chapter in TD Tech’s narrative emerged in 2021 when the company diversified its portfolio by venturing into rebranded phones from Huawei. One such model, the M40 5G, utilized a 7-nanometer chip from Taiwan’s MediaTek instead of Huawei’s Kirin processors. Due to Washington’s sanctions, companies are prohibited from providing Huawei with advanced chips containing US-origin technology, including MediaTek processors, manufactured by Taiwan Semiconductor Manufacturing Co, the world’s largest contract chipmaker. 

Nokia, in the thick of geopolitical challenges, clarified that TD Tech operates independently and is not linked to Nokia’s operations or supply chains in China. A year and a half later, in April 2023, Nokia revealed plans to leave TD Tech. The Finnish telecommunications equipment giant said its decision was driven by TD Tech’s expanded business scope, which now includes handsets, modems, and other devices. That broadened scope no longer aligns with Nokia’s strategic focus as a B2B technology innovation leader.

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“Nokia decided to divest its 51% stake in TD Tech for an estimated price of EUR 285 million (US$ 305.7 million), with an estimated gain of EUR 227 million (as of June 30; US$ 243.58 million), to New East New Materials, a company involved in raw materials manufacturing for the flexible packaging industry. However, the finalization of the deal was subject to conditions that included a pre-emption right (refusal of sale) of the joint venture partner, which is Huawei in this case,” Nokia said in September 2023.

New buyers from China to partner with Huawei

Over the weekend, reports surfaced that the Finnish telecom equipment giant had secured new buyers for its significant stake in a Beijing joint venture with Huawei. The deal, which faced protests from the Chinese company last year, is now back on track. Nokia’s attempt to sell its majority stake to Shanghai-listed ink maker New East New Materials in 2023 faced a hurdle when Huawei threatened to stop technology licensing to TD Tech. 

The prospective deal eventually fell apart. Analysts speculated that Huawei was likely unwilling to relinquish control of TD Tech, seeing it as a strategic asset to navigate US sanctions and enhance efficiency in specific market segments, as noted by Yang during that period. 

Now, according to a disclosure published on Friday by the State Administration for Market Regulation (SAMR), under the latest agreement, wireless technology firm TD Tech will be jointly controlled by Huawei and a group of entities that include the government-owned Chengdu High-Tech Investment Group and Chengdu Gaoxin Jicui Technology Co, as well as venture capital firm Huagai.

The equity distribution among the new stakeholders remains undisclosed, pending final government approval. Regulators said they harbor no antitrust worries about the deal and are open to public input until January 28. According to the SAMR, Huawei and TD Tech jointly oversee less than 10% of China’s smartphone market, though the specific timeframe for this data was not provided.

China’s market regulator has solicited public opinion on Huawei and Chengdu Hi-Tech Investment Group’s proposal for a complete acquisition of TD Tech.

 



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