Huawei Technologies, the Chinese tech conglomerate, has announced that it is “out of crisis mode” after posting a small increase in annual revenue. The company’s revenue rose by 0.9%, in line with the company’s forecast, indicating that it has achieved some level of stability after several rounds of US export controls since 2019 hammered its once-mighty smartphone business.
However, net profit declined by two-thirds to C¥35.6-billion ($5.6 billion), compared to 2021 when the profit was helped by the sale of its Honor mid-range smartphone business. The decline was still severe even when compared with 2020, with a drop of 44%.
Huawei announces good news in 2023
Huawei is one of many Chinese tech companies that have been targeted by US export control measures, including restrictions on the supply of chips and chip-design tools from US companies. The top executives of the major suppliers of equipment used in 5G telecommunications networks spoke at a news conference about how they had been pushed to “a fatal impasse” and “fought their way out” after the Washington sanctions.
Despite the challenges, the company has been making headway with replacing components affected by sanctions, thanks to the billions it is spending on research and development. The company’s R&D spending rose 13.2% over the year to C¥161.5-billion ($25.2 billion), equivalent to a quarter of company revenue. Such spending helped Huawei to replace more than 13,000 parts in its products that were hit by US trade sanctions, according to Meng Wanzhou, the company’s chief financial officer and daughter of its founder.
The company is investing in 5.5G and 6G technology and hopes to start rolling out 5.5G products by 2025. The company also sees areas such as green development as opportunities, said Chairman Eric Xu. Xu added that Huawei had achieved breakthroughs in electronic design automation (EDA) tools for chips produced at and above 14-nanometre technology with its partners. This means that Huawei can use its own EDA tools to design chips.
The phone company’s asset-to-liability ratio was 58.9%, and it had a net cash balance of C¥176.3-billion ($27.5 billion). While the revenue for 2022 came in at C¥642.3-billion ($100.1 billion), which represented mild growth over 2021, it was still far below the record C¥891.3-billion ($138.8 billion) logged in 2019 when it was the top Android smartphone vendor globally. Revenue from the enterprise division soared 30%, while that of its telecoms business inched up 0.9%, and sales for its consumer electronic business tumbled 11.9%.
The US has said Huawei represents a security risk, which it denies. The tension with the US saw Meng detained for three years in Canada over alleged efforts to cover up attempts by Huawei-linked companies to sell equipment to Iran in breach of US sanctions.
The charges against Meng were dismissed, and she returned to China in 2021. Huawei rotates its chairman every six months, and Meng is set to take up the position on Saturday. Like Huawei, China’s semiconductor industry has been the target of US export control measures, and the company will support industry efforts to become more self-reliant, Xu said, without providing details.
