Huawei secures a 15 billion yuan seven-year offshore loan, chip spending increases

According to Bloomberg's report on October 22, Huawei Technologies Co., Ltd. has secured a loan of 15 billion yuan (approximately 2.25 billion USD), amid a significant increase in chip spending for artificial intelligence-related projects. A knowledgeable source stated that this seven-year offshore yuan loan was provided by six Chinese lending institutions, including Bank of China, China Construction Bank, and Industrial and Commercial Bank of China, and the funds will be used for general corporate purposes. The source requested anonymity as the discussion pertains to non-public matters.

According to Moneycontrol, which reprinted the content attributed to Bloomberg, this transaction illustrates the role of domestic lending institutions in Huawei's offshore financing since the United States imposed restrictions on Huawei in 2019. Before finalizing, Huawei had exploratory contacts with international banks. Huawei, Bank of China, China Construction Bank, and Industrial and Commercial Bank of China did not immediately respond to requests for comment.

The report states that Huawei's research and development expenditure increased to 121 billion yuan in the first half of this year, while stockpiling due to soaring memory costs led to a negative cash flow of 39.9 billion yuan, eroding current profits. According to compiled data from Bloomberg, this is Huawei's first offshore syndicated loan since raising 11.8 billion Hong Kong dollars (approximately 1.5 billion USD) in 2020.