Huawei opposes Nokia from selling its stake in TD Tech Joint Venture

Apr 12, 2023

Huawei has come out in strong opposition against Nokia’s plan to sell its stake in the Joint Venture (JV) TD Tech. TD Tech was established in 2005 as a Joint venture between Nokia and Huawei with Nokia holding a 51% stake in the JV. The company has set up R&D centers in Beijing, Shanghai, and Chengdu with more than 1200 employees and has three business sectors: public networks, private networks, and security terminals.

However, now Nokia is planning to sell its majority stake in the JV to New East New Materials (NENM), a Chinese chemical product company. Nokia lined up New East Materials, a maker of ink and adhesive products, to acquire its 51 percent stake for $305 million.

In response to this announcement, Huawei has issued a warning to exercise its “right of first refusal” in relation to TD Tech, which would involve either purchasing Nokia’s shares before any other potential buyer or ending its licensing agreement with the company and its subsidiaries. Additionally, Huawei also has the option to liquidate its stake in TD Tech.

Why is Huawei against the sale?

Huawei has released an official statement clarifying that it has no intention to collaborate with New East New Materials in the operation of TD Tech. The company emphasized that its joint venture with Nokia was established based on a strategic partnership, leveraging the technical expertise, sales, and service capabilities of both organizations and NENM a chemical and adhesive company lacks the technical know-how and capacity to provide the same strategic potential as Nokia.

Huawei further stated that though Nokia has the legal authority to sell its stake in TD Tech, any potential buyer must possess comparable strategic capabilities as a prerequisite for maintaining the current level of collaboration between the two companies.

According to Yang Guang, a senior principal analyst of Omdia, Huawei is strongly opposed to the sale as the company needs to maintain the JV to withstand the increasing US sanctions and curbs.

He further said that although TD Tech was a JV between Huawei and Nokia, the former basically controlled the company as it supplied the major technology to TD Tech, and the management is also made of former Huawei employees, who focus on product solutions based on Huawei products but fine-tuned for the industry market.

Why is Nokia pressing for the sale?

Nokia has vowed to push through the sale and try to unload its 51% stake in TD Tech. The company said that though TD Tech was a legacy JV, over the years the company operations had changed and there are no more operational activities between TD Tech and Nokia.

Nokia further said that TD Tech is not aligned with its strategic goal of being a B2B technology innovation leader and hence Nokia has agreed to sell its ownership in the joint venture to New East Materials.

However, experts state that Nokia essentially is trying to distance itself from potential legal complications that could arise due to the ongoing US sanctions on China and especially Huawei which is a strong target of the US government.