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China's CETC absorbs defence IT rival

The China Electronics Technology Group (CETC), the country's biggest defence electronics firm, has absorbed the China Putian Information Industry Group, better known as Potevio, both state-owned enterprises announced on 24 June.

The merger means Potevio – a telecommunications firm with activities in the military sector – will become a subsidiary of CETC, which now becomes a corporation with annual revenues of more than USD50 billion. Such is the size of the merged corporation that the Chinese media have labelled it an “IT aircraft carrier”.

The merger is intended to strengthen CETC's resilience to US sanctions, and to support technology advancements in line with China's commitment – outlined in its 2021–25 14th Five-Year Plan – to achieve “independent innovation” in sectors including defence.

“After being approved by the State Council, China Putian Information Industry Group has been merged into the China Electronics Technology Group as a wholly owned subsidiary,” said the joint statement.

“China Putian Information Industry Group will no longer be directly supervised as an enterprise by the State-owned Assets Supervision and Administration Commission,” it added.

CETC plays a crucial role in Chinese defence programmes, supplying a range of electronics capabilities including communication, navigation, radars, and software.

The corporation is also an important supplier of components on strategic projects in missiles and space, and is at the forefront of China's efforts to develop Fourth Industrial Revolution technologies for the military. CETC's revenues in 2019 were about USD35 billion.

Potevio specialises in wireless communication and is a crucial developer of semiconductors and 5G networks. It is also a supplier of telecommunication systems to the Chinese military, but its primary interests are in civilian sectors.

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