Huawei made its first equity investment in a UK tech company this week when it joined forces with other large corporates and backed Bristol-based semiconductor company XMOS.

The Chinese networking giant teamed up with German industrial supplier Bosch and US technology manufacturer Xilinx to raise $26 million (£15 million) for the chip manufacturer, which was spun out of Bristol University. According to sources cited by the FT, the funding round gives XMOS a valuation in excess of $100 million (£59 million).

Huawei has been actively expanding in Europe and the UK as it seeks to diversify its revenue stream away from China, with the IT giant pledging to invest £1.2 billion into its UK operations by 2017.

XMOS, founded in 2005, makes high performance chips that have the potential to be used in the increasing number of web-enabled devices that are appearing in the home appliance and electronics markets as the Internet of Things phenomena takes hold. The company was part of the SETsquared accelerator, which was recently named the second best univestiry business incubator in the world. 

“This funding from major industry players alongside leading technology investors represents a resounding validation for our multicore technology and highlights the growing strength and importance of our business,” said Nigel Toon, CEO at XMOS.

He added: “Each of these important new partners will bring major strategic value alongside their significant financial investment in the business. This will help us in our mission to build XMOS into a major fabless semiconductor company.”

Steve Chu, chief strategy officer and VP at Huawei’s silicon division, said: “We have a very high regard for the team at XMOS and will be working closely with them on a number of exciting new projects.”

The investment in XMOS comes after Huawei revealed its intentions to open a new R&D centre in Bristol before 2015 and is a further sign that the company sees the city in the west of England as a key technology hub within the UK.  

The 26-year-old Chinese firm has come under scrutiny from certain western nations over fears that it builds backdoors into its networking equipment that can be exploited by the Chinese government for spying. However, Huawei has consistently denied these claims and maintained that it operates independently from the Chinese government.

Huawei has snapped up two other European companies in the form of the UK’s CIP Technologies in 2012 and Belgium’s Caliopa in 2013. The financial details of these deals were not disclosed.