Huawei, the Chinese tech giant known for its smartphones and telecom equipment, may be preparing for an initial public offering (IPO), a move that contradicts its CEO’s past statements but could attract valuable investment capital.
CEO Ren Zhengfei has long asserted that the company wouldn’t go public, prioritizing bigger ideals of society. But a new report by Reuters suggests that this stance could change if China’s national interests are at stake, potentially paving the way for an IPO.
Huawei has faced significant challenges in recent years, particularly after being hit by US sanctions. However, the company has shown remarkable resilience, developing its own Kirin 9000s series chipsets and launching 5G smartphones despite the restrictions. It also recently announced the Qingyun L540 laptop powered by the Kirin 9006C, a 5nm chip, defying the U.S. sanctions again.
While these advancements are impressive, the impact of foreign restrictions on Huawei’s growth is undeniable. Its profit margin plummeted to 7% in 2022, resulting in a net profit of just $5.1 billion. However, with its strong brand and technological prowess, Huawei’s potential market valuation remains high.
Reuters reports that Huawei could be worth $128 billion, based on a similar price-to-earnings ratio as Apple. This figure may even be conservative, with some experts like Lenovo’s ex-chief technology officer, Ni Guangnan previously suggesting a valuation closer to $1.3 trillion.
Chinese investors could play a crucial role in propelling Huawei’s growth, similar to the success story of SMIC, a chipmaker delisted from the US but thriving after a Shanghai IPO. By raising capital through public markets, Huawei might be able to accelerate its development and regain lost ground in the global tech race.
Only time will tell if Huawei’s IPO plans materialize, but the possibility marks a significant shift for the company.
In related news, Huawei’s former subsidiary, Honor also announced its own IPO plans in November. The spin-off has thrived since being sold by Huawei in 2020 and is expanding its reach in the global market gradually.
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