Visitors in front of a ZTE booth in an industry show in Guangzhou, South China's Guangdong Province in December. Photo: VCG

Chinese telecom equipment producer ZTE Corp will raise 11.5 billion yuan ($1.7 billion) through a private share placement to finance 5G technology research and development (R&D) and increase working capital, according to a company notice on Thursday.

Analysts said ZTE needed more capital to maintain its good development in the past year through R&D and pursue its goal of taking more global market share.

The funds raised through the private placement will be used for R&D of 5G technology and products, including cellular mobile communications networks and big data, which will help the company maintain a high level of R&D input, ensure competitiveness in technology and increase global market share, according to ZTE's notice.

"ZTE has had good development, which requires huge spending on R&D to stay in the lead in mobile telecom technology, in order to capture more global market share," Xiang Ligang, director-general of the telecom industry association Information Consumption Alliance, told the Global Times on Thursday.

The company has authorized 4,100 patents for 5G technologies, making it a major participant and contributor in global 5G technology research and standard formulation, said ZTE.

R&D investment in the first three quarters of 2019 accounted for 14.6 percent of its revenue, read ZTE's notice.

As a reference, Huawei's input into R&D made up 14.1 percent of its total revenue, according to Huawei's third-quarter financial report released in October. 

"The implementation of ZTE's capital replenishment plan, coupled with the rapid expansion of 5G applications, will support the company in keeping pace with other market competitors quickly, especially Huawei," an industry analyst told the Global Times on condition of anonymity. Huawei is the biggest competitor of ZTE, as China is in the forefront of the world in 5G innovations, the person said.

Chinese companies accounted for more than one-third of global filings for more than 70,000 5G-related technology patents as of 2019, official data showed.

ZTE has netted 35 commercial 5G contracts worldwide so far, cooperating with more than 60 operators, according to the notice by the company. 

Huawei has signed up to 70 5G commercial contracts with leading global operators, said the Huawei financial report. 

ZTE announced plans for the private placement in February 2018.

The company's shares rose as much as 4 percent to 38.10 yuan in early trade on Thursday and ended at 37.41 yuan, up 1.33 percent.