Huawei Reports Biggest Ever Revenue Drop Following US Sanctions, Chairman Says ‘Aim Is To Survive’

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Chinese telecommunications giant Huawei Technologies has reported its worst-ever interim revenue decline. The revenue of the company dropped around 30 percent in the first half of 2021. Data released by the company shows that the revenue fell to USD 49.5 billion or 320 billion yuan. Despite being a privately held firm, Huawei has been reporting its financial results regularly. The Shenzhen-based company has been doing this for almost a decade. This is apparently the result of US sanctions which forced the company to sell it one of the most dominant businesses i.e. of the handset.

The company had to do this even before it could properly develop new growth areas. The company said that major of the decline came from the consumer business of the company. The revenue from this has dropped by almost 47 percent to 135.7 billion yuan. The revenue from the consumer business group was around 255.8 billion yuan during the same period last year. The lack of advanced chipsets also contributed to the revenue loss as the company’s shares dwindled in the international market. But the net profit margin of the company somehow increased by 0.6 percentage points. This is mainly because of the efficiency improvements.

The network gear business of the world’s largest telecoms equipment maker was down 14.2 percent when compared to last year. The business declined to 136.9 billion yuan. The drop was mainly because of the delay in projects at China Mobile, which is the largest wireless network operator in the world. Huawei has acquired a sizeable share of supply contracts for 5G base stations in the company. Huawei was once the biggest vendor of smartphones in China. However, the recent drop in revenue has shaken the company to the core. So much so that Huawei rotating chairman Eric Xu Zhijun had to say that the company’s only aim at the moment is to ‘survive.’ “Our aim is to survive, and to do so sustainably,” Xu said. However, the silver lining is the company’s enterprise business. This is because it generated sales of 42.9 billion yuan.

This is a rise of almost 18.2 percent from last year. Encouraged by the result, the company has decided to focus more on diversifying its operations. The company had earlier announced that it is looking forward to being among the top ranks of cloud services providers in the Asia-Pacific region. “We want to be one of the top three cloud services providers in the Asia-Pacific region. We are hopeful of doing this in the next three years,” said president of Huawei Cloud operations Zeng Xingyun. The business of the company has more than doubled in size. It has now almost 20 percent of the market share in the country.

Huawei was added to an export black of Washington in the year 2019. The then Trump administration had even barred the company from accessing critical technology of the United States origin. This affected the ability of Huawei to design and develop its own chip using American technology. The company had to struggle with a lot of other things because of the restrictions imposed last year. For example, search engine giant Google was barred to license its Android mobile operating system to the Chinese company.

There are several other American companies that have been blocked from selling or transferring technology. This impacted the handset business of Huawei and as a result, the company lost it position among the top five vendors in China for the first time in over seven years. According to data, the company managed to ship only 6.4 million handset units in Q2 this year in comparison to 27.4 million units in the same quarter in 2020.