Huawei wary despite 23% rise in revenue

China's Huawei Technologies says revenue in the first half of the year grew 23.2% - faster than a year ago - despite an intense US campaign against it that ultimately became a trade ban.

SHANGHAI • Chinese tech giant Huawei Technologies yesterday warned that a United States trade blacklisting will impact short-term revenue growth, even as its half-year revenue surged 23 per cent, thanks to soaring smartphone sales at home.

On the back of its first results since Washington placed it on a so-called entity list in May, which effectively banned American firms from supplying to it, Huawei also said it remained focused on improving the global smartphone business which bore the brunt of supply chain disruptions caused by the US action.

"Revenue grew fast up through May," Huawei chairman Liang Hua told reporters at an earnings briefing yesterday.

"Given the foundation we laid in the first half of the year, we continue to see growth even after we were added to the entity list. That's not to say we don't have difficulties ahead.

"We do, and they may affect the pace of our growth in the short term," he said.

The US government, which alleges Huawei is a national security risk as its equipment could be used by Beijing to spy on others, has since given Huawei a three-month reprieve till Aug 19.

US President Donald Trump has signalled Washington would be relaxing the sanctions on Huawei, though details are unknown.

Huawei's founder and chief executive officer Ren Zhengfei told reporters last month that the impact of the blacklisting was worse than expected.

It could cost the company US$30 billion (S$41 billion) in revenue, he said, and Huawei's revenue this year and next year could stay roughly the same as last year's - at around US$100 billion.

 
 

Mr Liang said yesterday Huawei remained confident in its ability to cope with the blacklisting, and its 5G product roll-out had not been affected. The company has secured 11 commercial 5G contracts since the blacklisting.

Analysts said strong domestic smartphone sales and new 5G carrier contracts were helping to offset the impact from the blacklisting that threatens to cut Huawei's access to advanced US components and software like Google Android apps.

Unlisted Huawei, which started disclosing quarterly results only this year, said revenue in the first half rose to 401.3 billion yuan (S$80 billion), faster than the 15 per cent growth of a year earlier.

Mr Liang said the company's proprietary Hongmeng mobile operating system was still under development for connected devices, and that its preference was to continue to use Google's Android operating system for mobile.

Huawei has given little information about Hongmeng, its own back-up operating system under development, in case it is cut off from US-made software.

REUTERS

A version of this article appeared in the print edition of The Straits Times on July 31, 2019, with the headline 'Huawei wary despite 23% rise in revenue'. Print Edition | Subscribe