Huawei’s revenue growth weakens under ‘intense pressure’


Huawei’s revenue growth slowed significantly in the first nine months of 2020, the Chinese telecoms giant said on Friday, citing “intense pressure” on operations during the coronavirus and as the United States mobilizes to cut off its access. to vital components.

Huawei, the world’s leading provider of telecommunications network equipment and a major smartphone producer, said it raised 671.3 billion yuan ($ 100.7 billion) in revenue between January and September, an increase from 9.9 percent year-on-year.

That’s less than the 24.4 percent growth during the same period last year, while its profit margin fell to 8.0 percent from 8.7 percent last year.

Washington views Huawei, founded in 1987 by former People’s Liberation Army engineer Ren Zhengfei, as a Chinese espionage threat and has lobbied its allies to avoid its team as it tries to block its access to global semiconductor supplies.

“As the world grapples with Covid-19, Huawei’s global supply chain came under intense pressure and its production and operations experienced increasing difficulties,” the company said.

He vowed to “do everything possible to find solutions, survive and move on.”

The brief announcement did not make direct reference to pressure from the US, nor did it include a performance breakdown for its various segments, such as smartphone sales. Privately owned Huawei provides these details for half-year and full-year earnings only.

But during the online launch of the company’s latest smartphone on Thursday, Huawei’s chief executive of consumer products Yu Chengdong said the company was “suffering” from mounting US pressure, which he called “unfair.”

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“Today we are in a very difficult time for Huawei,” Yu said.

Bad news has accumulated for Huawei, which the United States claims is controlled by Beijing.

Washington says Huawei’s equipment could contain security holes that China could exploit to spy on, but the company and the Chinese government reject the claim, saying the United States has never provided evidence.

Washington has essentially excluded Huawei from the lucrative US market and pressured its allies to do the same.

In July, Britain banned mobile phone providers from using Huawei equipment on its new 5G networks, giving British companies until 2027 to phase out any existing hardware.

France has also imposed heavy restrictions on the use of Huawei equipment, and Sweden this week banned the company and Chinese rival ZTE from its own 5G network.

– Writing on the wall –

Much of the full impact of U.S. measures to cut off access to semiconductors and other components has been postponed until now by the Trump administration granting a series of waivers that delay full implementation while it conducts talks of long duration on a trade agreement with China. .

But analysts said the writing is on the wall for Huawei, which may need to make major business adjustments.

The US measures to prevent Huawei’s access to much of Google’s Android system could hurt its position in the global smartphone market, said Marc Einstein, chief analyst at ITR Corporation in Tokyo.

But it should remain strong in China’s domestic market, and Huawei maintains a strong position in Latin America, the Middle East and Africa, even if more developed markets like Europe appear to be closing.

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“It’s entirely feasible that if a big trade deal (between the United States and China) is struck, some of these challenges could recede,” Einstein said.

“Huawei is not going anywhere.”

Huawei surpassed Samsung as the world’s top smartphone seller in the second quarter due to strong domestic demand, industry tracker Canalys said in July, adding that it was the first quarter in nine years that a company other than the South Korean giant or Apple ranked first. .

Huawei said last month that its fledgling homegrown operating system could be available on smartphones early next year, as it scrambles to build an alternative application ecosystem.

Phil Marshall, research director at Tolaga Research, said Huawei may “lose some of the edge” it enjoys in 5G technologies and networking equipment, but that it has accumulated so many 5G patents over the years that it should remain an actor. global. .

Pressure from the US will also force Huawei to achieve technological self-sufficiency by making its own chips.

“We know how successful they have been in developing technology. They just can’t be ruled out, “Marshall said.



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