No pay, no gain

By Bloomberg | 27 Apr 2019 at 08:25hrs
Huawei Technologies Co. wants to dominate the next generation of wireless technology and it's investing in that goal at a pace few companies can match.

The world's leading maker of networking equipment spent $15.3 billion on research last year.

That's more than double the amount it shelled out roughly five years ago — a pace surpassed by only Inc. among the world's 10 biggest spenders on R&D.

That ballooning outlay, aimed at shoring up Huawei's lead in fifth-generation networking, is likely to unnerve Washington.

The Trump administration accuses the Shenzhen company of aiding Beijing in espionage — something it's repeatedly denied — and is orchestrating a campaign to block it from 5G rollouts around the globe.

Huawei is making increasingly aggressive forays into everything from mobile and cloud services to semiconductors.

In money terms, its 2018 R&D budget trailed only those of Amazon, Alphabet Inc. and Samsung Electronics Co., data compiled by Bloomberg show.

The U.S. government is waging a campaign against Huawei as companies around the world prepare to invest billions of dollars in 5G networks, a key ingredient for self-driving cars and other advanced infrastructure.

Still, nations accounting for roughly 40 percent of the world's gross domestic product are either embracing Huawei or appear unlikely to fully restrict the Chinese vendor.

Huawei's 2018 research budget grew 149 percent from 2014, outpacing increases by Apple Inc., Microsoft Corp. and Korea's Samsung over the same period. Amazon's 210 percent growth in R&D expenditure was the only bigger rise among the top R&D spenders.

"All the business achievements Huawei has made should be credited to the company's handsome R&D investment budget," said Xiang Ligang, a telecoms consultant and chairman of industry website "It has significantly boosted the company's competitiveness."

How Huawei Became a Target for the U.S. Government: QuickTake

Huawei's 2018 R&D budget accounted for 14 percent of its revenue, the second-highest proportion, after Alphabet, among the top six spenders.

And for the years from 2014 to 2018, Huawei ranked seventh in overall R&D expense at 368 billion yuan — $58 billion in average rates, or $54.6 billion at the current exchange rate.

Amazon was the world leader over the same period. Bloomberg's R&D figures were adjusted for one-time charges and non-recurring activities, and the dollar amounts based on average exchange rates during the relevant periods.



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