Huawei experiences largest-ever revenue fall as sanctions crush its consumer division
"Our aim is to survive"By Rob Thubron 11 comments
What just happened? More than two years since Donald Trump's administration blacklisted Huawei, the Chinese giant has reported its largest-ever revenue drop, over 29%, for the first half of 2021. It also experienced a 38% decline in sales during the three months ending in June.
Huawei's revenue for the first half fell to 320.4 billion yuan ($49.56 billion), reports Reuters. Not surprisingly, the biggest fall was in the consumer business group that once represented more than half its business. The segment, which includes the company's phones, declined 47% to 135.7 billion yuan.
Profit margins for the half of the year did rise slightly, by 0.6% to 9.8% (31.4 billion yuan), primarily due to efficiency improvements.
Using the figures, Bloomberg estimates that Huawei's sales for the previous quarter declined 38% to 168.2 billion yuan ($26 billion).
"These have been challenging times," Rotating Chairman Eric Xu said in a statement Friday. "Our aim is to survive, and to do so sustainably. Despite a decline in revenue from our consumer business caused by external factors, we are confident that our carrier and enterprise businesses will continue to grow steadily."
It took a while for Huawei to feel the effects of being placed on the Bureau of Industry and Security (BIS) Entity List in May 2019, preventing it from accessing American-made technology or dealing with companies that use US tools or designs, including TSMC, without a license. The tech giant saw its first-ever quarterly revenue decline in Q4 2020 and was forced to sell its Honor division so the budget phone maker could avoid the sanctions.
Huawei is no longer one of the top phone vendors globally or in Europe, and its tablet shipments were down -53.7% during the second quarter. Sales have also suffered in its home nation: for the first time in seven years, Huawei is no longer one of the top five phone vendors in China.
Revenue for Huawei's telecom equipment business was also down, -14% YoY, as the pace of the 5G rollout in China slowed.
It's not all bad news for Huawei. Revenue from its enterprise business group grew 18% to 42.9 billion yuan in the first half, a result of Covid-19 and the increased demand for ICT connectivity, while its cloud services business doubled in size to take a 20% share of the Chinese market.
With profits in its mobile business falling, Huawei is turning to other income sources, from cloud computing and wearables to smart cars. It's also pushing into more traditional industries, including pig farming and coal mining.
Image credit: Karlis Dambrans, Yuangeng Zhang