Huawei to invest RMB3b in new chips ‘ecosystem’

Kunpeng, the new ARM-based server chips being developed by Huawei Technologies, is getting a RMB3 billion ($436 million) capital injection over the next five years. The aim is to build an entire “computing ecosystem” for the new microchips.

Xu Zhijun, Huawei’s rotating chairman, said the investment will be used to bolster the company’s IT infrastructure related to Kunpeng and encourage the development of applications based on the processors. An “online community” is being established to offer developers tools, open-source operating systems, and access to related projects. 

The Kunpeng 920 was unveiled in January, aimed at higher-end performance products. A new chip for mid-range phones was rolled out in June. Coming up still is the release of the Hongmeng OS. All of these point toward Huawei’s broader push to secure its technology independence.

Meanwhile, retrenchments overseas continue to pile up for the company. Following news this week that Huawei is laying off staff at its R&D center in the US, reports from India suggest the company is scaling down its operations there, asking employees to take severance packages in a phased process. 

Huawei employs around 6,000 people in India. According to unnamed sources familiar with the matter, retail, marketing, research and development and design are some of the functions impacted by the scaling down of operations. 

Analysts and industry watchers said that both Huawei and Honor, a Huawei smartphone subsidiary that caters to the entry-level market, have been left with a lot of inventory from falling sales. A decline of 18% in shipments for Honor between March and May was reported by India’s Counterpoint Research. (This was before Huawei was named on the US government’s Entity List.) The drop is expected to increase to 25-30% by end of July. 

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