Huawei scouts Europe for tech startups to secure supply chain

Huawei Technologies Co. is in talks about investing in European tech startups and contributing to research in a bid to secure its supply chain as tensions with the U.S. escalate, people familiar with the matter said.

In the final weeks of 2019, Huawei executives visited startups and venture capital firms in countries including Germany and France, they said. The companies discussed business collaborations and potential cash injections in exchange for equity stakes, the people said, asking not to be identified because the talks were private.

No final decisions have been made and Huawei may decide against making any investments, the people said. A spokesman for Huawei didn’t immediately respond to a request for comment.

Huawei has rapidly shifted toward self-reliance as American sanctions jeopardized a carefully orchestrated global supply chain. U.S. President Donald Trump has repeatedly railed against China and its companies, including Huawei, citing industrial espionage, national security and intellectual property theft. He has limited their access to the U.S. market and to American suppliers, while also pressing allies from Japan to the Netherlands to review policies toward the Asian giant.

The company has been open about its desire to work closely with researchers in Europe. But any larger investment may face scrutiny. The U.K. this week revealed partial bans for Huawei equipment in high-speed 5G networks. Orange SA, the former French phone monopoly, said on Friday it would leave Huawei out of future wireless infrastructure.

Under President Emmanuel Macron’s watch, the French state has added AI and semiconductors to the list of sectors under the foreign investments regulation act. The law allows the state to review, block or demand government reviews in any investment in entities that are part of the list, which spans communications to space.

U.K. merger rules introduced in 2018 increased scrutiny of technology deals on national security grounds. Germany’s economy ministry also said in November that it planned to tighten regulation covering the takeover of high-tech firms by non-EU companies

Still, Huawei already has a collection of small investments in Europe. In 2014, the Chinese company made its first investment in the U.K., buying a stake in semiconductor company XMOS, while in 2010 Belgian wireless technology firm Option sold semiconductor company M4S to Huawei for 8 million euros ($8.9 million).

The company’s also said it will put 20 million pounds ($26 million) behind British app developers to encourage them to write software for its in-house smartphone platform, HarmonyOS. It’s part of a $1.5 billion global developer program announced last year.

Huawei is also building up its European research and development arm after deciding in November to move its U.S. research business to Canada. It’s currently building a new lab in Cambridge—a U.K. tech hub—that would house 350 staff.