Huawei has obtained land-use rights in Southern China’s Dongguan City to construct a manufacturing plant for smart car components. The company is leaning deeper into the auto sector, in line with its series of attempts to turn around weak business performance due to US sanctions.
Huawei won a bid to lease the land for RMB 188 million (USD 19.5 million), according to the local government’s announcement. The company will begin to develop the 65 acres of land before the end of 2022 and complete construction within three years, and the total investment is required to reach RMB 2.4 billion (USD 380 million), the announcement said.
Dongguan is located northwest of Shenzhen and is one of the largest car manufacturers in Southern China. Since 2014, Huawei has been constructing an R&D headquarter in the city. It is scheduled to open in 2022.
This is the second time for Huawei to lease industrial land in the last two months. In October, Huawei was granted usage rights for a patch of industrial land in Shenzhen for RMB 3 billion (USD 470 million), the local government announced. The land is roughly double the size of its leased area in Dongguan, and will be developed for operations in the next-generation IT and new energy industries over the next 1.5 years, the government said.
The tech titan suffered a severe financial loss after the Trump administration implemented “tech decoupling” policies in late 2019. The original backbone of Huawei—its smartphone business—suffered because Huawei faced difficulties in sourcing components from international suppliers.
Huawei’s revenue in the third quarter this year was RMB 135.4 billion, a steep drop of 37.69% compared with the same period last year, according to the company’s latest financial results. Its financials were dragged down by weak consumer business, rotating chairman Guo Ping said, referring to a deficit in smartphone sales.
The company has made multiple attempts to offset its weak performance in the smartphone sector. Huawei spun off Honor, its most lucrative business arm, to free the brand from trade restrictions, and is now licensing its phone designs to third-party companies, KrASIA previously reported
The latest land leases point to Huawei’s plan to establish a presence in the car manufacturing industry, as it aims to supply smart solutions to traditional automakers, the company said in its 2020 annual report. In August, Huawei was allowed to import auto chips, video screens, and sensors from the US, Reuters reported.