Profit at China’s Huawei Technologies’ plummeted 52% in the first half as difficult economic conditions curtailed demand from customers, adding to the carnage caused by US sanctions.
The Chinese technology firm’s profit margin narrowed to 5%, with a net profit of 15.1 billion yuan ($2.23 billion), according to calculations, down from 31.39 billion yuan in the first half of 2021. Revenue fell 5.9% year-on-year during the period to 301.6 billion yuan ($44.73 billion).
A weak economy, Covid disruptions and supply chain challenges hurt the company’s device business that sells smartphones and laptops, a company spokesperson said. Revenue from that business slumped by more than a quarter to 101.3 billion yuan. Increased investment in new technology and businesses, also dragged on profit, it said, but its carrier and enterprise businesses both saw growth.
Second-quarter sales in the wider Chinese smartphone industry fell 14% year-on-year, while volumes hit a decade low, Counterpoint Research said last month.
The United States placed Huawei on an export blacklist in 2019 that barred it from accessing critical technology of US origin, hurting its ability to design chips and source components from outside vendors.
The ban devastated the company’s once-dominant handset business.
Huawei is building new business lines, including smart car components and energy efficiency systems, with its cloud services business, taking 18% of China’s growing market, according to consultancy Canalys.
Huawei has also rolled out its own proprietary Harmony operating system, which is now being used on 300 million Huawei devices.
“We will harness trends in digitalization and decarbonization to keep creating value for our customers and partners, and secure quality development,” Hu said.
- Reuters with additional editing by Jim Pollard