Huawei's revenue extend decline in first quarter as telecoms giant struggles under US sanctions

Chinese telecommunications giant Huawei Technologies Co said its first-quarter revenue declined 13.9 per cent year on year, as US sanctions continued to take a toll on its operations.

The decline, however, marked a deceleration from the 28.6 per cent drop in full-year revenue for 2021.

In the first quarter, Huawei recorded 131 billion yuan (US$19.86 billion) in revenue, with a net profit margin of 4.3 per cent, the Shenzhen-based company said on Thursday.

Huawei is a privately-held company, but it releases financial statements on a regular basis.

Huawei suspends some Russian operations amid sanctions risks, reports say

The telecoms giant is struggling to diversify its revenue sources after US sanctions restricted its access to advanced chips, crippling the company’s once-lucrative smartphone business. Meanwhile, Huawei has reportedly put some operations in Russia on hold to minimise risks of “secondary sanctions”.

Huawei’s operations are still under scrutiny by the US government. The Financial Times reported on Wednesday that Washington is looking into claims that Yangtze Memory Technologies Co, a Chinese semiconductor maker, supplied chips to Huawei in a potential violation of US export controls.

Ken Hu Houkun, Huawei’s rotating chairman, said in a statement that first-quarter performance was “in line with forecasts”. “We have yet again increased our investment in R&D to harness the momentum of our innovation and create new value for customers,” he said.

Since 2019, Huawei has found itself at the centre of a US-China trade war, superseded by a full-blown tech war, which bars the company from access to components that use core US technologies.

Huawei, which once briefly overtook Apple and Samsung Electronics in global smartphone sales, saw revenue at its consumer business unit slump 49.6 per cent year on year in 2021, after 3.3 per cent growth in 2020 and a 34 per cent increase in 2019.

Meng Wanzhou, Huawei’s chief financial officer and the daughter of company founder Ren Zhengfei, said last month that US sanctions have “significantly affected” business, especially in smartphones and personal computers.

Meanwhile, Huawei is betting on sectors that are less reliant on US technologies, such as smart vehicle systems for carmakers, and its enterprise services business, which accounted for 16.1 per cent of total revenue in 2021.

“In 2022, we still face a challenging and complicated business environment,” Hu said in the statement.