Still big profits, but Huawei really struggled because of US sanctions

Still big profits, but Huawei really struggled because of US sanctions


2021-04-02 09:53:40

Huawei’s revenue growth fell sharply last year, when US sanctions and the effects of the Covid-19 pandemic put pressure on the Chinese tech giant.

CNBC news agency citing the business results report published by Huawei on March 31, as saying that its 2020 revenue of the company reached 891.4 billion yuan, equivalent to 136.7 billion USD, up 3.8% compared to that with 2019. This revenue growth is much lower than the 19% increase Huawei achieved in 2019.

China was the only market for Huawei to achieve positive growth last year. Its “home turf” sales reached 584.9 billion yuan, or $ 89.7 billion, up 15.4 percent and accounting for 65 percent of total revenue.

In 2020, China will be the world’s only major economy to grow as it soon comes under pandemic control. Meanwhile, other major economies declined due to the spread of corona virus, forcing the government to impose a blockade, paralyzing economic activities.

Huawei’s net profit in 2020 is 64.6 billion yuan, or $ 9.9 billion, up 3.2 percent.

Over the past two years, the US has imposed a series of sanctions on Huawei, on the grounds that the smartphone and smart device maker represents a national security risk to the US – an accusation that Huawei is ink denied.

Due to US sanctions on Huawei, the US technology firm had to cut ties with the Chinese counterpart. That means Huawei’s smartphone products are no longer equipped with Android operating system. This is not a big deal for Huawei in the Chinese market, where Google services like Gmail are blocked, but does great damage to Huawei in other markets where consumers are used to. use those applications.

In addition, the administration of President Donald Trump has also ordered to cut off the supply of key chips using US technology to Huawei, causing great difficulties for the company’s smartphone production.

Both of these measures caused sales of Huawei smartphones to plummet. Before being punished by the US, Huawei was the world’s second-largest smartphone maker in terms of sales, but in the fourth quarter of 2020, Huawei slipped out of the top 5 largest smartphone manufacturers in the world.

Huawei says its consumer equipment segment generates revenue of 482.9 billion yuan, or $ 74.1 billion, in 2020, up 3.3 percent, compared with a 34 percent increase achieved in 2019. .

Huawei’s rotating chairman, Ken Hu, said that the consumer appliances business results were not up to the company’s expectations due to declining smartphone sales. “Because of the unfair sanctions the US imposed on us, our mobile phone business suffered a decline in sales,” he said.

However, some other Huawei products such as tablets, laptops, wearables, smart home appliances … all increased revenue.

In 2019, Huawei launched its own operating system called HarmonyOS, which is designed to be compatible with different devices. The company is expected to implement the operating system on a number of products, and last month it announced HarmonyOS has appeared on the Mate X2 smartphone. The company hopes the new operating system can support consumer devices.

Not only targeting Huawei’s smartphone segment, the US is also targeting the Chinese company’s telecom equipment segment. During the Trump era, the US urged allies not to use 5G network equipment made by Huawei, and some countries such as Australia and the UK responded. This is one reason why Huawei’s equipment segment will grow only 0.2% in 2020.

A bright spot for Huawei is the business segment, with products and services sold to companies in various sectors, like cloud services. Recently, this segment has become a major focus for the company.

In 2020, the business segment brought Huawei 100.3 billion yuan in revenue, or 15.4 billion USD, up 23%, becoming the strongest growth segment among Huawei divisions.

#big #profits #Huawei #struggled #sanctions

Leave a Reply

Your email address will not be published. Required fields are marked *