Huawei Gets $2.3 Billion Offshore Loan as Chip Spending Soars

Huawei Technologies Co. has secured a 15 billion yuan ($2.25 billion) loan from Chinese banks, according to a person familiar with the matter, as spending on chips to power artificial intelligence related projects soars.

The seven-year offshore yuan denominated loan was provided by six Chinese lenders, including Bank of China Ltd., China Construction Bank Corp. and Industrial & Commercial Bank of China Ltd., the person said, asking not to be identified discussing private matters. The proceeds will be used for general corporate purposes, the person added.

The deal highlights the key role domestic lenders play in Huawei’s offshore funding needs since the US imposed restrictions on it in 2019. The telecom titan has emerged as China’s de facto national chipmaking champion and is one of a handful of firms central to Beijing’s goal of dominating AI and replacing American software and circuitry with local equivalents.

Before finalizing the loan, Huawei held exploratory talks with international banks, people familiar with the matter said.

Huawei, BOC, CCB and ICBC didn’t immediately respond to requests for comment.

The company’s demand for funding remains robust after boosting research spending to 121 billion yuan in the first half this year. Meanwhile, skyrocketing memory costs have prompted it to stock up on supplies, leading to negative cash flow of 39.9 billion yuan, which eroded its profit in the period.

The latest financing is Huawei’s first offshore syndicated borrowing since 2020, when it raised an HK$11.8 billion ($1.5 billion) loan, according to Bloomberg-compiled data. Prior to 2019, Huawei was an occasional borrower in the international market, tapping syndicates of European, US and Asian banks for billions of dollars of offshore loans.

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Last month, Chinese AI pioneer DeepSeek publicly released software it created with Huawei to program AI chips, reflecting the deepening ties between the two. DeepSeek plans to deploy at least 160,000 of Huawei’s top accelerators at a massive data center it’s building in Inner Mongolia, which could create one of the largest known clusters of the company’s AI chips.

DeepSeek wants to purchase more of Huawei’s best chips, people familiar with the matter said earlier, but the company doesn’t currently have the production capacity.