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First-half Huawei profits drop due to US technology restrictions


By TechThop Team

Posted on: 12 Aug, 2022

The company said on Friday that its first-half net profit was less than half of what it had been in the second half of last year as a tough economy curbed customer demand.

It was estimated that revenue during the period passed CNY 301.6 billion, a decrease of 5.9 percent year-on-year, with a sharper decline in January and March.

'Despite the strong impact on Huawei's device business, its business-to-business enterprise unit grew steady,' said Ken Hu, company rotating chairman.

Based on calculations by Reuters, the Chinese technology company's profit margin narrowed to 5 percent, with a net profit of CNY 15.08 billion, down from CNY 31.39 billion in the first half of 2021.

The company's device business, which sells smartphones and laptops, has been affected by a weak economy, COVID-19 disruptions, and supply chain challenges, a spokesperson said.

It is estimated that revenue from that business declined by more than a quarter to CNY 101.3 billion in 2015. In addition to its carrier business, it also saw growth in its enterprise business.

Investing in new technology and businesses also affected Huawei's profit. According to Counterpoint Research, Chinese smartphone sales dropped 14.2 percent in the second quarter of last year, while volumes fell to a decade low.

Huawei was placed on an export blacklist by the United States in 2019 which prevented it from accessing critical U.S. technology, and hindered its chip design and component procurement.

Its once-dominant handset business was devastated by the ban. Canalys estimates Huawei takes 18 percent of China's growing market with its cloud services business, including smart car components and energy efficiency systems.

There are also 300 million Huawei devices in use today that are running Huawei's proprietary Harmony operating system, which is now the fastest-growing operating system in the world.

'Our objective is to leverage trends in digitalization and decarbonization to create value for our customers and partners, and to guarantee quality development for our employees,' Hu said.

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