China’s Huawei places $6 billion worth of orders in California
In a boost to the state’s technology industry, a Chinese electronics maker said it was ordering $6 billion worth of microchips and other components from three California tech firms, including Broadcom Corp. in Irvine.
Huawei Technologies Co., one of the world’s largest providers of telecom and Internet technology, said the investment — spread over three years — was a “significant increase” over the current contracts it has with Broadcom, San Diego-based Qualcomm Inc. and Avago Technologies in San Jose.
The announcement was made Friday in downtown Los Angeles. The three California tech companies will provide advanced information and communication technologies such as chip sets for Huawei’s networks and mobile phones, said Charles Ding, a corporate senior vice president at Huawei.
The company touted the contracts as a win for the local economy, saying they would “directly and indirectly” create tens of thousands of jobs in the U.S.
The agreement “reaffirms Huawei’s determination to deliver on its promise to be a local economy contributor, and is a demonstration of confidence in the long-term relationships we have cultivated with our local high-tech partners,” said Chen Lifang, senior corporate vice president.
Huawei has been aggressively pushing into the U.S. market in recent years, with analysts saying it is poised to become a real threat to U.S. companies such as Cisco Systems Inc. Last year Cisco Chief Executive John Chambers called Huawei “a very tough competitor over the long term.”
Huawei has also faced significant hurdles to breaking into the U.S. market because of the federal government’s suspicions that the company has ties to the Chinese military and gets unfair assistance.
“Huawei is definitely very competitive with Cisco, and I think one of the advantages they have, along with the other Asian-based competitors, is a cost advantage,” said Shaw Wu, an analyst at Sterne Agee. “It’s not too surprising hearing them win these deals here or there.... Huawei is trying to move up the stack.”
But Ding disputed those claims, saying Friday’s move underscored the company’s commitment to the U.S. market and “demonstrates Huawei isn’t a competitor to American companies; Huawei is a partner to American companies.”
He declined to break out the amount of each individual contract.
Cristiano Amon, a senior vice president at Qualcomm, called Huawei an “important global customer” and a growing leader in the wireless industry. A Broadcom spokeswoman declined to comment on the deal.
Based in Shenzhen, China, 25-year-old Huawei has evolved into the world’s second-largest provider of telecommunications infrastructure. It began U.S. operations in 2001 and has since partnered with 280 U.S. tech firms.
Its revenue was $28 billion in 2010.
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