Huawei’s drop in sales slowed by Chinese cloud

Trade lost due to US and other countries’ sanctions somewhat offset by expansion in domestic B2B market

Huawei’s first six months of its financial year showed a drop of 5.9% compared with the same period last year. However, its revenue from the telco and enterprise markets, including cloud computing, rose by 28% to Rmb57.4 billion to €830 million.
 
Even so, Huawei’s net profit margin was 5% overall for the first half of the year compared with 9.8% for the same period last year. Huawei says its reported figures are in line with expectations.
 
In 2021, when US sanctions that started in 2019 really began to bite, revenues fell by 29% due to export controls blocking Huawei’s access to tech and components, citing national security and other reasons, including breaking trade sanctions with Iran and accusations of industrial espionage.
 
In the cloud market, Huawei has benefited from Beijing’s crackdown on Chinese big techcos that the government thinks have got too big for their boots, with Tencent and Alibaba particularly feeling the force of the government’s displeasure.
 
In contrast, Huawei is perceived to have close ties to Beijing, which is one of the reasons it rouses suspicion overseas, and is helping to fill the cloud services vacuum by providing cloud services itself, rather than just selling equipment for others to build cloud with.
 
Huawei’s smartphone division has been the worst hit because it no longer had access to Android updates and developments. Its smartphone sales are down 25% in the first six months.

Ken Hu, Huawei’s Rotating Chairman, said in a statement, “Moving forward, we will harness trends in digitalization and decarbonization to keep creating value for our customers and partners, and secure quality development.”