Huawei to hike R&D spending to $15-20 bn focusing on 5G

Huawei Technologies is set to increase its spending on research and development (R&D) to between $15 billion and $20 billion.
Huawei, which previously pledged to invest $10 billion to $20 billion annually on R&D, spent 89.7 billion yuan or $13.23 billion on R&D in 2017, accounting for 14.9 percent of its total revenue.

Huawei will dedicate 20-30 percent of that amount to basic science research, up from its previous expectation of 10 percent, China’s largest telecommunications equipment and smartphone maker said in a statement.

Amazon and Alphabet, the two biggest spenders on R&D in the United States, spent $22.6 billion and $16.6 billion, respectively, in 2017, according to financial data company Factset.

About 80,000 of its employees, or 45 percent of its total workforce, are engaged in R&D, Huawei said on its website.

The increased spending on research comes as the United States, Australia and Britain push back against Huawei’s network communications technology on security grounds amid increasing international political tensions.

A UK government report last week said technical and supply-chain issues with Huawei’s network equipment exposed Britain’s telecom networks to security risks, reversing previous endorsement.

Huawei said on Thursday it intends to charge fair and reasonable (FRAND) rates for its 5G intellectual property to facilitate the adoption of the new technology, which is expected to come into large-scale use in 2020.

Chinese technology companies led by Huawei are estimated to own about 10 percent of the essential patents for 5G worldwide, a significant jump compared with their share in 4G and 3G eras.