Huawei Technologies Co, which lost nearly a third of its revenue last year in its worst sales performance ever as its smartphone business was hammered by US sanctions, is fighting an uphill battle to reposition itself as a solutions provider for enterprises and governments, analysts say. The lucrative smartphone business of privately-held Huawei was hit hard after Washington banned it from access to advanced chips two years ago on national security grounds. This came amid escalating US-China tech tensions, which have dashed the Shenzhen-based giant’s hopes of dethroning long-time leaders Apple and Samsung Electronics. Meng Wanzhou, Huawei’s chief financial officer who returned to China last September after an extradition battle against the US in Canada, said at an event on Monday that the US sanctions were an important factor behind the company’s revenue plunge. Huawei CFO Meng Wanzhou says telecoms giant ‘more capable of dealing with uncertainty’ Meng, the daughter of Huawei’s founder and chief executive Ren Zhengfei, said the tech giant will navigate a future via continuous investment in research and development after it spent nearly a quarter of its revenues on R&D in 2021. In terms of individual businesses, the telecoms and network gear giant is betting on some new areas where it is either a total newcomer or up against stiff competition. One of the new areas Huawei is exploring is smart vehicle systems for carmakers – where it spends a large amount of time telling potential clients that the company has no ambitions to become a carmaker itself. Guo Ping, the rotating chairman, reiterated this again at an event on Monday. Among its enterprise services segment, which reported 2 per cent revenue growth in 2021, its cloud computing businesses reported rapid growth of 30 per cent to reach 20.1 billion yuan in revenue. However, by comparison the cloud services unit of Alibaba Group Holding, owner of the South China Morning Post , surged 62.5 per cent to US$9.2 billion. Ivan Lam, a Hong Kong-based analyst at Counterpoint Research, said US sanctions on Huawei have cast a shadow over its potential deals with industry clients. “One of the main reasons why some clients are hesitant to work with Huawei lies in the potential risks involved,” said Lam. “Clients have to root out [the] negative impact in the long run.” But Lam added he was confident about Huawei’s foray into services like cloud computing given the potential. “Digitisation is a trillion-dollar market and a common, long term trend – not just for China but also globally. A small slice of the pie would be big enough for the company,” Lam said. The potential for Huawei to use its hardware and software technologies to digitalise operations at coal mines, factories, ports and hospitals is huge, but the jury is still out on whether the company, which began life as a telecoms equipment manufacturer, can turn this advantage into sustainable sources of revenue and profit. Sanctions-hit Huawei loses ground in global telecoms equipment market “One of Huawei’s challenges in this area is building trust among IT decision-makers as well as the industry-specific solutions and channels,” said Bryan Ma, vice-president of client devices research at IDC. Huawei has set up a number of “army groups”, or cross-departmental teams, to venture into coal mines, smart roads, customs and ports, solar energy and energy solutions for data centres – areas chosen by the company as fields vital for its future. Last year the tech giant also teamed up with domestic carmakers to launch cars that Huawei helped to build, including using its HarmonyOS Smart Cockpit operating system as the ‘brain’ of the latest Aito M5 model in collaboration with Chongqing Sokon Industry Group Stock. These efforts accompany Huawei’s plans to co-develop a luxury electric sport-utility vehicle , sell refurbished smartphones and license its handset designs , expand its cloud services operations in the Asia-Pacific region, help domestic enterprises cut their carbon footprint , supply more 5G base stations and core network gear to China’s major telecoms operators , establish partnerships for its HarmonyOS mobile platform and the previous sell-off of its Honor budget smartphone business . The Honor sale to Shenzhen Zhixin New Information Technology boosted Huawei’s net profit in 2021, which the company noted was a record high at 113.7 billion yuan, a 76 per cent jump from the year before. The sale of subsidiaries- including Honor as well as server unit Xfusion – contributed 57 billion yuan of net income, according to the company. Huawei will receive the proceeds of its Honor sale in instalments, according to its annual report. Two UK Huawei directors quit after company keeps silent on Russian invasion However, Huawei’s own smartphone business continues to face an uncertain future. Industry research firm Counterpoint forecasts Huawei’s 2022 global shipments will be around 15 million, down another half compared with the 33 million units shipped in 2021. “It’s a tough road ahead for Huawei if it still can’t get its hands on 5G chips. Sure, it may have a lifeline of 4G chips to keep it going, but that will increasingly look more dated as the rest of the industry pushes 5G,” said Ma from IDC, which sees Huawei’s smartphone shipments hitting a bottom in 2021. “One thing that Huawei has been able to do during its crisis is redirect its efforts to other areas such as PCs, wearables and smart home devices where its supplies are more stable,” said Ma, adding that Huawei climbed to the fourth spot globally last year in wearables from sixth in 2018.