Huawei sees steep decline in revenue in 2021, as US sanctions continue to bite into company

The release of Huawei's latest annual report at the company's headquarters in Shenzhen on March 28, 2022. PHOTO: AFP

SHENZHEN - Revenue for the world's top telecommunications equipment maker, Huawei, declined by a steep 28.6 per cent last year, largely due to a drop in its smartphone business, as US sanctions continued to bite into the company.

But net profit hit a record high as Huawei improved operating efficiency and expanded its enterprise business, according to the company's latest annual report released on Monday (March 28).

Huawei's net profit was 113.7 billion yuan (S$24.3 billion), up 75.9 per cent from a year ago, while revenue fell to 636.8 billion yuan.

"The multiple rounds of sanctions imposed by the US have significantly affected our business, especially smartphones and PCs," said chief financial officer Meng Wanzhou at the release of the report at Huawei's headquarters in Shenzhen.

"Despite a revenue decline in 2021, our ability to make a profit and generate cash flows is increasing," she added.

In 2019, Washington placed Huawei on an export blacklist and imposed sanctions on the firm, cutting it off from accessing key technologies of United States origin, which in turn affected the Chinese company's ability to design its own chips.

Former US president Donald Trump had accused Huawei of providing the Chinese government with a backdoor to its data and raised questions about the security of its equipment - allegations that Huawei has denied repeatedly.

The ban also crippled Huawei's smartphone business - which was the world's largest for months in 2020 - causing the firm to sell off its budget handset unit Honor to stem losses.

Last year, Huawei's consumer business, which used to be the firm's main revenue stream, fell 49.6 per cent year on year to 243.4 billion yuan.

Its carrier business, which included setting up infrastructure for the 5G network, fell 7  per cent to 281.5 billion yuan within the same period. It is now Huawei's main revenue stream.

Revenue for its enterprise business, which helps companies in their digital transformation, grew 2.1 per cent to 102.4 billion yuan.

The company's rotating chairman, Mr Guo Ping, said it would grow its smart screen and wearable tech business - which grew by 30 per cent from a year ago - to boost revenue in its consumer business.

During the press conference, Mr Guo said in response to a question on Huawei's operations in Russia that the firm had no plans to roll out smartphones equipped with its home-grown platform HarmonyOS outside of China.

Mr Guo also reiterated Huawei's commitment to Asean, noting the vast potential of South-east Asia's digital economy.

Huawei's chief financial officer Meng Wanzhou (left) and rotating chairman Guo Ping at the press conference in Shenzhen on March 28, 2022. PHOTO: AFP

The company will also not let up on research and development, despite the fall in revenue, Mr Guo said, adding that investment in this area was necessary to secure Huawei's future growth.

Having been denied access to advanced process techniques, Huawei would pursue efforts to drive innovation in systems engineering, he said, alluding to the US ban.

Last year, Huawei invested 142.7 billion yuan - or 22.4 per cent of the company's total revenue - into research and development.

Huawei is a private company that has in recent years released its annual results audited by US firm KPMG.

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