Huawei Wages Counterattack amid Sanctions, Posting 15% of Margin in H1

BEIJING, August 14 (TiPost)— Huawei Technologies Ltd. has waged its long-anticipated counterattack with significantly improvement at the bottom line despite ongoing U.S. sanctions that cut it off from semiconductors and other technologies.

Credit：Visual China

Huawei said revenue in the first six months of this year gained 3.1% year-over-year (YoY) to RMB310.9 billion (US$43.1 billion), versus a decline of 5.87% in revenue the same period a year earlier. Huawei didn’t disclose profit figure but posted profit margin of 15% from January to June, up from 5.0% in the year-ago period.

The half-year data suggested revenue in the quarter ended June 30 rose 4.8% YoY to RMB178.8 billion, the largest yearly increase since only the fourth quarter of 2022, CNBC calculated. Net income that quarter jumped to RMB26.8 billion, nearly tripling the same quarter last year, according to Bloomberg calculations.

In the first half of the year, Huawei’s core business information and communication technologies (ICT) infrastructure, including carrier and enterprise services, generated RMB167.2 billion, accounting for about 54% of total revenue.

The second largest contributor consumers business, which includes smartphones and electric vehicles (EVs), brought RMB103.5 billion, representing a 2.2% YoY growth, slower than the company’s overall revenue increase but recovering from a sharp fall of 25.4% a year ago. Consumer segment is the only one with YoY comparable figures as Huawei started reporting related revenue breakdown by telecom, cloud and other sectors late 2022.

Three minor business segments– cloud services, digital power and intelligent automotive solutions, which involves network and tech for EVs brought RMB24.1 billion, RMB24.2 billion and RMB1 billion in the first six months of 2023, respectively.

Huawei said the half-year financial results were in line with its forecast. “Huawei has been investing heavily in foundational technologies to take advantage of trends in digitalization, intelligence and decarbonisation, and focusing on creating value for our customers and partners,” said Meng Wanzhou, the rotating chairperson of Huawei starting from April 1. ICT infrastructure maintained solid, consumer sales delivered positive growth, digital power and cloud businesses achieved good growth, and new components of intelligent automotive continued to become more competitive, Meng commented performance the first half of the year.

Increase in operating income is highly likely to benefit from digital transformation and continuous optimization of its product portfolio and increasing resilience of its development, Chinese newspaper Southern Metropolis Daily noted. It is hardly to ignore Huawei’s diversification into EV and other new industries these years and resurgence of its handset business recently. Earlier this month, IDC, the market intelligence firm on tech industry, unveiled Huawei became the rare spotlight in China’s lackluster smartphone market in the second quarter of the year.

IDC estimated 65.7 million smartphones shipped in China in that quarter, a narrower year-over-year (YoY) decline of 2.1% compared with the previous quarter’s decrease of 12.1%. However, Huawei mobile notched 13.0% of market share, reaching the Top 5 again by having a tie with Xiaomi, which had a share of 13.1% in the second quarter. IDC believed the return of Huawei was mainly supported by a better product launching pace as well as the favorable sales performance of its P60 series and foldable Mate X3 model. Huawei’s share surged 76.5% YoY, becoming one of the only two vendors with a positive YoY growth in the top 5 ranking.

Huawei smarphone is poised to gain more traction in the coming months. The Shenzhen-based company is expected to return to the 5G smartphone industry by the end of the year as it should able to make 5G chips domestically along with chipmaking from Semiconductor Manufacturing International Co (SMIC), Reuters cited third party technology research firms covering China’s smartphone sector last month.

 Huawei launched its latest version of operating system HarmonyOS 4.0, with the key updated voice assistant Xiaoyi in the beginning of this month. Underpinned by Pangu Models 3.0, the latest version of its Pangu pre-trained deep learning AI model, Xiaoyi can access to large AI model, thus enabling smartphones equipped with HarmonyOS 4 to complete tasks more accurately and quickly than iPhone.

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