Huawei revenue sinks; smartphones hurt by US sanctions

Huawei revenue sinks as smartphones hurt by US sanctions

Huawei Technologies Ltd. is struggling to hold onto market share after then-President Donald Trump cut off access in 2019 to US technology

Representative Image. Credit: iStock Photo

Chinese tech giant Huawei's revenue fell 29.4 per cent from a year earlier in the first half of 2021 as smartphones sales tumbled under US sanctions imposed in a fight with Beijing over technology and security.

Revenue declined to 320.4 billion yuan ($49.6 billion), according to figures released Friday, from 454 billion yuan ($70.2 billion) reported for the first half of 2020.

Part of that was due to Huawei's November sale of its low-cost Honor smartphone brand in hopes of reviving the unit by separating it from the sanctions on the parent company.

Huawei Technologies Ltd. is struggling to hold onto market share after then-President Donald Trump cut off access in 2019 to US technology and services including high-end processor chips and Google maps and music.

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Washington says Huawei is a security risk and might aid Chinese spying, which the company denies.

Sales by Huawei's consumer unit, which includes smartphones, tumbled 47 per cent compared with figures reported for the first half of 2020. That unit was 42 per cent of total revenue.

Sales of network gear and other technology to phone and internet companies fell 14.2 per cent while revenue for the enterprise unit rose 17.2 per cent.

“Our aim is to survive, and to do so sustainably,” said Eric Xu, one of three executives who take turns as chairman, in a statement.

“Despite a decline in revenue from our consumer business caused by external factors, we are confident that our carrier and enterprise businesses will continue to grow steadily.”

The company gave no profit figure but said its net margin was 9.8per cent. That would be a decline from the 11.1per cent reported for the first quarter.

Huawei, headquartered in the southern city of Shenzhen, near Hong Kong, reported earlier it eked out a 3.8per cent profit gain in 2020 to 891.4 billion yuan ($135.8 billion), but Xu warned 2021 would be a “challenging year.”

Huawei has responded by emphasizing its sales in China and for electric and self-driving cars, industrial networks and other applications that are less vulnerable to U.S. pressure.

Huawei has a stockpile of US chips for high-end smartphones but executives have said those were being used up. Huawei designs its own chips but U.S. controls block suppliers from using American technology to produce them.

Huawei fell out of the top five smartphone brands in China by sales in the three months ending in June for the first time in more than seven years, according to Canalys. Honor was No. 5 but its market share fell to 9per cent from 14per cent a year earlier.

“Smartphone brands are ferociously competing to exploit the decline of Huawei," said Canalys analyst Amber Liu in a July 29 report.

Huawei says it is owned by the Chinese employees who make up half its workforce of 197,000 in 170 countries. The company began reporting financial results a decade ago to try to defuse Western security concerns.