Huawei Revenue Falls 29% in the First Half

Huawei Technologies revenue fell by almost a third in the first half of 2021. U.S sanctions were hampering the growth of its business that has new business areas still in their early stages.

The telecommunications company said on Friday that it generated revenue of  320.4 billion yuan ($49.56 billion).

 The biggest fall came from Huawei’s consumer business group. The group includes handsets, where revenue fell 47% to 135.7 billion yuan.

A company spokesman said it eked out a 0.6 percentage point rise in its net profit margin to 9.8%. This was largely due to efficiency improvements. 

Former U.S. President Donald Trump put Huawei on an export blacklist in 2019. He barred it from accessing critical technology of U.S. origin. This has affected its ability to design its own chips and source components from outside vendors.

For the first time in more than seven years, Huawei dropped out of the top five vendors in China. It also shipped 6.4 million units, according to consultancy Canalys.

That compares with 27.4 million handsets shipped in China in the second quarter in 2020. That excludes shipments of Honor budget handsets. The firm sold the brand in November.

Huawei Aims to Survive

According to an internal memo from founder and CEO Ren Zhengfei, the Chinese telecoms giant is trying to pivot towards software and business areas not at risk of U.S. pressure. 

Eric Xu, Huawei’s rotating chairman said that they’ve set their strategic goals for the next five years. Their aim is to survive, and to do so sustainably, he said.

The firm started rolling out its Harmony operating system in June. That means it is no longer wholly reliant on Google (NASDAQ:GOOGL)’s Android platform.

Notably, U.S. sanctions banned Google from providing technical support to newer phone models.

A spokesman said, first-half revenue from Huawei’s enterprise business group grew 18% to 42.9 billion yuan, as the COVID-19 outbreak spurred industry demand for ICT connectivity.

Huawei also  sees strong growth in its cloud services business. According to Canalys, it is more than doubling in size in the first quarter to take a 20% market share in China.

Meanwhile, a V-shaped recovery in Asia’s biggest economy is expected. Beijing’s strong Covid-19 response as well as  assertive stimulus moves are sure to produce 8% growth. Signs indicate that China’s post-pandemic boom is floundering.