Huawei suffers biggest-ever decline in revenue after US blacklisting

Huawei Technologies updates

Chinese technology giant Huawei suffered its biggest-ever decline in revenue in the first half of this year, after the US imposed sanctions that battered its smartphone sales around the world.

Chair Eric Xu said that survival in spite of US pressure was Huawei’s overriding priority, as it attempts a “pivot to software” to boost its resilience through diversification.

“We’ve set our strategic goals for the next five years, our aim is to survive, and to do so sustainably,” Xu said in a statement.

Since Washington first added Huawei to its trade blacklist in 2019, it has progressively tightened the screw, citing national security concerns. Suppliers who use any US technology to make components for Huawei must first receive Washington’s approval, which has in effect choked off the supply of several key parts.

The Chinese tech champion posted revenue of Rmb320.4bn ($49.5bn) in the first half, a decline of 29.4 per cent from the same period last year.

Its consumer electronics arm’s revenue fell by nearly 47 per cent, or more than Rmb120bn, from a year ago, as severed access to crucial US chips prevented the company from selling its phones.

“We were definitely impacted by the shortage of chips . . . and the US sanctions,” said a Huawei spokesperson, who added that the sale of the company’s Honor smartphone brand had also contributed to the slump in the consumer electronics division.

Huawei’s key business of selling infrastructure equipment to telecoms carriers also declined, dropping 14.2 per cent to Rmb136.9bn.

The enterprise business, which includes digital solutions for smart cities, finance, transportation, energy, manufacturing and education, was the only growth segment, bringing in Rmb42.9bn in sales, a rise of 18.2 per cent from last year.

Huawei’s priority is to stay resilient in the face of US pressure. One area where this is evident is in what chief executive Ren Zhengfei has called a “pivot to software”, including bolstering its fast-growing cloud computing business.

“We must dare to lead the world in the pure software domain,” Ren said in a statement. “In domains where software overlaps with hardware, we should focus on optimising software to complement hardware,” he added.

The focus on software embraces the HarmonyOS system that Huawei used to replace Google’s Android system. It has installed Harmony OS in about 15m smartphones and other devices since June.

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