After stopping many phone production lines at Foxconn and Pegatron factories, Huawei also sold one of its important businesses: marine fiber optic cable.
Specifically in a file submitted to Shanghai Stock Exchange, Hengtong Optic-Electric, a Jiangsu-based provider of fiber-optic telecommunications products, said it had signed a contract to buy all 51 % of shares that Huawei Technologies holds Huawei Marine in the form of stocks and cash. The deal value is not disclosed.
In recent times with Huawei being listed as a threat to national security by Trump authorities, Huawei Marine Systems has had difficulty bidding for new projects. And although Huawei repeatedly emphasized that the company did not cooperate with the government to grant access to its systems for intelligence purposes, the US Department of Commerce still issued a ban on companies. America does business with Huawei, thereby making Huawei's supply chain in serious danger.
In March, the WSJ quoted US officials as saying that security risks are expanding into Huawei's cable system. Sea cable is the backbone of the global Internet network and Huawei is still increasing market share in the market which is still dominated by companies such as SubCom of the US, Japan's NEC and Alcatel-Lucent of Europe. Huawei Marine Systems was only established in 2008 under the cooperation of British Marine Global Marine.
Huawei Marine has participated in 90 global marine fiber optic projects and has so far installed 50,361 km of cable, including the first 6000 km of cables connecting Africa and South America, completed in September last year. (In the map above, Huawei Marine's marine optical cables are green).
According to Huawei's annual financial report, Huawei Marine in 2018 net profit of 115 million yuan (16.66 million USD) on revenue of 394 million yuan (57 million USD). The report also found that Huawei Technologies won the majority of Huawei Marine's board voting rights in August 2018 while UK's Global Marine retained 49% of NCI.
As for Hengtong Optic-Electric, the company has the largest shareholder, Hengtong Group, with 15.66% of the shares. Hengtong Group was founded by Cui Genliang and he is currently the second largest shareholder with 14.95% of shares.
On Hengtong Group's website, the company said it is currently China's largest provider of fiber optic and smart grid solutions with more than 70 branches in Mainland and around the world, including the company. Cable manufacturer PT Voksel Electric of Indonesia.
Similar to Huawei Marine, Hengtong Optic-Electric also participated in the 10,000-kilometer submarine cable market, which was installed for Internet projects in Papua New Guinea, Chile, Bolivia and Mexico. By the end of fiscal year 2018, Hengtong Optic-Electronic achieved net profit of 2.5 billion yuan (362 million USD) on 33.9 billion yuan (4.9 billion USD) in revenue.