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Nokia to Exit Telecommunications Joint Venture with Huawei Amid US-China Tensions
Nokia is set to exit its joint venture with Huawei in Beijing. Wireless technology firm TD Tech will be jointly controlled by Huawei and a group of entities. Regulators have no antitrust concerns regarding the deal.
Finnish telecoms equipment giant Nokia is set to exit its joint venture with Huawei Technologies in Beijing, as tensions between the US and China continue to escalate. After a proposed deal fell through last year due to strong protest from the Chinese partner, Nokia has now found new buyers for its majority stake in the joint venture.
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, Chengdu Gaoxin Jicui Technology Co, and venture capital firm Huagai. The State Administration for Market Regulation (SAMR) disclosed this information on Friday.
The disclosure did not provide details on the equity distribution among the new participants. Prior to the sale, Nokia held a 51% stake in TD Tech, while Huawei owned 49%.
Regulators have stated that they have no antitrust concerns regarding the deal and will be seeking public feedback until January 28. According to SAMR, Huawei and TD Tech together control less than 10% of China's smartphone market, although the specific time frame for this data was not specified.
In the third quarter of last year, Huawei had a 14% share in the Chinese smartphone market, ranking fifth behind Honor, Oppo, Vivo, and Apple, according to market intelligence firm Counterpoint Research.
TD Tech, which was founded in 2005, was initially a joint venture between Huawei and German tech conglomerate Siemens. In 2007, Siemens sold half of its stake to Nokia, and in 2013, Siemens divested all its shares, making Nokia the major shareholder.
Known for its wireless communications equipment, including 4G and 5G networking gear, TD Tech operates in over 100 countries and serves 8 million industry customers, as stated on its website.
While Nokia was the majority owner of the joint venture, industry observers have noted that Huawei has been the de facto controller. "The management are former Huawei employees, with product solutions based on Huawei products but fine-tuned for the industry market," said Yang Guang, an analyst covering the telecoms sector at research firm Omdia.
Last year, when Nokia attempted to sell its majority stake to Shanghai-listed ink maker New East New Materials, Huawei threatened to stop licensing technology to TD Tech, leading to the collapse of the deal. Analysts believe that Huawei did not want to lose control of TD Tech, as it could help the company circumvent some US sanctions and address specific market segments more efficiently.
In 2021, TD Tech started selling rebranded Huawei phones under its own brand. These included the M40 5G, which used a 7-nanometer chip from Taiwan-based MediaTek instead of Huawei's Kirin processors.
Due to sanctions imposed by the US, companies are currently prohibited from selling advanced chips made with US-origin technology to Huawei. This includes MediaTek processors manufactured by Taiwan Semiconductor Manufacturing Co, the world's largest contract chip maker.
However, despite these restrictions, Huawei launched the Mate 60 Pro last year, equipped with an advanced, home-grown 5G processor.
Nokia is set to exit its joint venture with Huawei in Beijing.
Wireless technology firm TD Tech will be jointly controlled by Huawei and a group of entities.
Regulators have no antitrust concerns regarding the deal.
Sources: SCMP