Huawei’s revenue stabilized in 2022 as the corporate expanded into recent areas resembling cloud computing and automotive technology. But its profits fell as pressure from US sanctions and China’s pandemic control weighed heavily on the Chinese tech giant.
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Huawei reported its biggest annual profit drop ever on Friday as U.S. sanctions continued to hit its business and tight control of the pandemic in China weighed heavily on the corporate.
The Chinese telecommunications giant reported that its net profit for 2022 was 35.6 billion yuan ($5.18 billion), down 69% year-on-year. That is greater than the 54% annual decline in 2011, in keeping with CNBC calculations.
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Nonetheless, in 2021, the corporate saw a giant increase in profits after it sold its Honor smartphone brand to a consortium of buyers, making the comparison with 2022 quite large. Huawei also cited rising commodity prices, tight controls on the pandemic in China last 12 months, and rising R&D spending as reasons for the decline in profits.
“In 2022, the difficult external environment and non-market aspects continued to weigh on Huawei’s business,” Eric Xu, Huawei’s rotating president, said in a press release.
Huawei said revenue increased by 0.9% to 642.3 billion yuan in 2022 as the corporate stabilized its operations after sales fell greater than 28% in 2021. The Shenzhen, China-based company sought to diversify its operations into recent areas including cloud computing and automotive after a couple of tough years where US sanctions have hampered the corporate.
“Within the midst of this storm, we kept rushing forward, doing all the pieces in our power to take care of business continuity and serve our customers,” said Xu.
In 2019-2020, the Chinese tech giant was cut off from key US technologies resembling Google’s Android operating system and the components it requires, resembling semiconductors. This paralyzed Huawei’s smartphone business, which was once primary in the world. Huawei’s consumer business, which houses its smartphone division, fell greater than 11% to 214.5 billion yuan in 2022, a much less sharp decline than in 2021.
Huawei continues to launch devices starting from smartphones to smartwatches. But the corporate is having a tough time selling devices outside of China because it may possibly’t use Android, an operating system that is well used overseas. Huawei launched its own operating system, HarmonyOS, which it says was installed on 330 million devices at the top of 2022, up 113% year-on-year. But this operating system has not gained popularity outside of China.
Huawei’s carrier business, which incorporates equipment sold to telecommunications firms, generated 284 billion yuan in revenue, up 0.9% year-on-year in comparison with a decline in 2021. The US has been urging countries over the past few years to ban Huawei from using their next-generation 5G networks. Countries just like the UK have already done so, while Germany is reportedly considering banning some Huawei devices from its 5G networks.
Faced with challenges in each the carrier and consumer industries, Huawei sought to diversify the corporate into recent areas. Huawei’s corporate business, which incorporates a portion of its cloud computing revenue, grew 30% year-on-year to 133.2 billion yuan.
Huawei has sought to introduce its products, including cloud computing, to specific industries resembling finance and mining to assist firms digitize their operations. The corporate disclosed data for the cloud computing business alone for the primary time and said it generated revenue of 45.3 billion yuan in 2022.
Huawei has also jumped on China’s electric automobile boom and introduced vehicles in partnership with automaker Seres. Huawei said its nascent “Intelligent Automotive Solutions” unit brought in 2.1 billion yuan in 2022. The corporate said it has invested $3 billion in the unit since its inception in 2019 and currently employs 7,000 R&D staff.
Meng Wanzhou, Huawei’s chief financial officer, who returned to China in 2021 after being detained in Canada in 2018 on the request of the US, said the corporate’s performance was “in line with forecasts”, adding that the tech giant’s financial position “stays solid. “