US Sanctions Have Hurt Huawei's Growth in 2020

Huawei’s growth slowed in 2020, with China accounting for a larger portion of its revenue. It is a result of US trade restrictions that took a toll on its non-domestic performance.

Rotating chairman Ken Hu noted the vendor’s revenue was still higher in 2020 despite an overall negative environment, hailing measures to diversify its supply chain along with heavy investment in R&D for the progress. He noted disruption to global supply chains also affected its suppliers in the US, where it previously purchased components valued at $10 billion to $20 billion annually. “For the industry it has been a lose-lose situation. It [is] very unfair and caused a lot of damage to us, and our upstream suppliers are also suffering.“

Net profit was 3.2 percent higher at CNY64.6 billion ($9.86 billion), with revenue rising 3.8 percent to CNY891.4 billion. The share of revenue from China increased from 59 percent in 2019 to 65 percent. Revenue in China grew 15 percent to CNY584.9 billion, but fell in all other regions, down 12.2 percent to CNY180.8 billion in EMEA; 8.7 percent to CNY64.4 billion in Asia Pacific; and 24.5 percent in the Americas to CNY39.6 billion. In 2019, Huawei booked a 5.6 percent increase in profit and 19.1 percent rise in revenue.

Hu said its smartphone business fell short of expectations, as it was impacted by a shortage of components caused by US sanctions. But he noted its Consumer Business Group revenue was up 3.3 percent to CNY482.9 billion with the weakness offset by other devices including tablets, wearables, smart screens and PCs. He said Huawei hasn’t been able to see a clear picture on the future of its smartphone business, making it hard to make forecasts. However, he asserted the vendor’s next flagship models will be released as planned, including the second generation of its foldable smartphone.

“The overall direction of our strategy has not changed. We will continue to push ICT infrastructure, as we see an inevitable trend towards digital transformation. We will also focus on improving the consumer experience across different platforms“. Revenue at its carrier group was flat at CNY302.6 billion, with enterprise up 23 percent to CNY100.3 billion. R&D investment stood at $21.8 billion, 15.9 percent of overall revenue, and 3,000 staff were added taking its global total to 197,000.