Huawei could be worth more than Apple as it considers going public in 2024
Huawei already stunned the world by building its first 5G chipset in three years despite U.S. sanctions. With this application processor powering the Mate 60 flagship series, Huawei's future is brighter than it has ever been since the U.S. first placed the company on the Entity List in 2019 calling it a national security threat. And with rumors swirling around that SMIC, China's largest foundry, is throwing money and brain power at creating 3nm chipsets using older DUV lithography machines, the U.S. might feel compelled to tighten its restrictions on Huawei and SMIC.
Nonetheless, with Huawei able to escape every time the U.S. tries to pin it, and optimism that the company can win back lost ground in the smartphone industry, Reuters reports that there have been discussions about taking Huawei public. Ren Zhengfei, the founder of Huawei, always rejected the possibility of Huawei shares trading on a stock market.
However, if it is in China's national interest for Huawei to raise money by selling shares, Zhengfei would go along with having an IPO for the manufacturer. In a letter to Huawei staff written by Ren in 2021, he wrote that Huawei could "gradually enter the market in the future." Former Huawei sub-brand Honor, which Huawei sold in 2020 to a consortium for $15 billion, laid out plans last month to go public.
The success of the Huawei Mate 60 Pro could lead Huawei to go public
So how much could Huawei be worth? Based on 2022 earnings of $5.1 billion and applying the same trailing earnings multiple that Apple is trading at (25x), Huawei could be valued at "only" $128 billion. But the former chief technology officer at Lenovo, Ni Guangnan, said back in 2019 that Huawei could be worth as much as $1.3 trillion. At that time, Apple had just topped $1 trillion in market capitalization which means that Guangnan viewed Huawei as being more valuable than Apple. Today, Apple is valued by the stock market at $3 trillion.
Chinese investors have already shown that they love a hot tech stock, especially if it is a company associated with the country. In 2019, the largest foundry in China, SMIC, was delisted from the New York Stock Exchange with a valuation of less than $6 billion. After going public in Shanghai, the company now has a market cap near $30 billion. And if Huawei goes public, international money managers are all going to want a piece of the action.
A Huawei IPO would certainly be a cause for celebration in China as such a listing could be viewed as another sign that U.S. sanctions against Huawei have been a failure. China has three stock exchanges, the Shanghai Stock Exchange, the Beijing Stock Exchange, and the Shenzhen Stock Exchange.
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