Huawei experiences largest-ever revenue fall as sanctions crush its consumer division

midian182

Posts: 7,184   +65
Staff member
What just happened? More than two years since Donald Trump's administration blacklisted Huawei, the Chinese giant has reported its largest-ever revenue drop, over 29%, for the first half of 2021. It also experienced a 38% decline in sales during the three months ending in June.

Huawei's revenue for the first half fell to 320.4 billion yuan ($49.56 billion), reports Reuters. Not surprisingly, the biggest fall was in the consumer business group that once represented more than half its business. The segment, which includes the company's phones, declined 47% to 135.7 billion yuan.

Profit margins for the half of the year did rise slightly, by 0.6% to 9.8% (31.4 billion yuan), primarily due to efficiency improvements.

Using the figures, Bloomberg estimates that Huawei's sales for the previous quarter declined 38% to 168.2 billion yuan ($26 billion).

"These have been challenging times," Rotating Chairman Eric Xu said in a statement Friday. "Our aim is to survive, and to do so sustainably. Despite a decline in revenue from our consumer business caused by external factors, we are confident that our carrier and enterprise businesses will continue to grow steadily."

It took a while for Huawei to feel the effects of being placed on the Bureau of Industry and Security (BIS) Entity List in May 2019, preventing it from accessing American-made technology or dealing with companies that use US tools or designs, including TSMC, without a license. The tech giant saw its first-ever quarterly revenue decline in Q4 2020 and was forced to sell its Honor division so the budget phone maker could avoid the sanctions.

Huawei is no longer one of the top phone vendors globally or in Europe, and its tablet shipments were down -53.7% during the second quarter. Sales have also suffered in its home nation: for the first time in seven years, Huawei is no longer one of the top five phone vendors in China.

Revenue for Huawei's telecom equipment business was also down, -14% YoY, as the pace of the 5G rollout in China slowed.

It's not all bad news for Huawei. Revenue from its enterprise business group grew 18% to 42.9 billion yuan in the first half, a result of Covid-19 and the increased demand for ICT connectivity, while its cloud services business doubled in size to take a 20% share of the Chinese market.

With profits in its mobile business falling, Huawei is turning to other income sources, from cloud computing and wearables to smart cars. It's also pushing into more traditional industries, including pig farming and coal mining.

Image credit: Karlis Dambrans, Yuangeng Zhang

Permalink to story.

 

QuantumPhysics

Posts: 5,320   +6,043
Now that Trump is gone, forgotten and never to return, China's business relations can return to normal. But ultimately, the COVID quarantine and world wide panic has led to pullbacks in most markets. Many of the South East Asian countries, for example, that purchase Hua Wei products are currently in recession with high levels of unemployment.

Hua Wei will be back to normal eventually.
 

duckofdeath

Posts: 448   +586
Now that Trump is gone, forgotten and never to return, China's business relations can return to normal. But ultimately, the COVID quarantine and world wide panic has led to pullbacks in most markets. Many of the South East Asian countries, for example, that purchase Hua Wei products are currently in recession with high levels of unemployment.

Hua Wei will be back to normal eventually.
Why? Did Uncle Xi go out and say he'll stop meddling with "private" businesses and their production? Until that happens, things won't change. T#### getting most things wrong doesn't mean he got everything wrong.
 

kapital98

Posts: 378   +333
Now that Trump is gone, forgotten and never to return, China's business relations can return to normal. But ultimately, the COVID quarantine and world wide panic has led to pullbacks in most markets. Many of the South East Asian countries, for example, that purchase Hua Wei products are currently in recession with high levels of unemployment.

Hua Wei will be back to normal eventually.

This is a hot take. It's fair to say China's tech industry will go back to normal. But Trump's actions were a massive blow to the company (selling Honor is a perfect example of the country doing fine as long as it doesn't have the same negative goodwill attached to it).

Unfortunately for world trade: Trump's tariffs still exist and Biden has been slow to rescind almost anything Trump did. Whether this is because he's afraid of political pushback for being 'weak' or if his administration really does want to punish China -- that's not clear.

It certainly is strange that the US is trying to pick winners and losers for Chinese multinational corporations.
 

RedBear

Posts: 23   +20
Hua Wei will be back to normal eventually.
ZTE used to be a major player and it never recovered from the US sanctions, for all intent and purposes the new administration is basically the same as the old one with more migrants coming from Mexico, looking at things right now it's Xiaomi that will take Huawei's place as the most prominent Chinese phone maker.
 

Shadowboxer

Posts: 1,721   +1,324
The trade ban on China has worked out very well for American business so I doubt Biden will roll it back. Personally I won’t miss Huawei, their phones were not as good as devices from Apple or Google and to a lesser extent Samsung. I prefer Mii phones for budget stuff.
 

fps4ever

Posts: 739   +982
This is a hot take. It's fair to say China's tech industry will go back to normal. But Trump's actions were a massive blow to the company (selling Honor is a perfect example of the country doing fine as long as it doesn't have the same negative goodwill attached to it).

Unfortunately for world trade: Trump's tariffs still exist and Biden has been slow to rescind almost anything Trump did. Whether this is because he's afraid of political pushback for being 'weak' or if his administration really does want to punish China -- that's not clear.

It certainly is strange that the US is trying to pick winners and losers for Chinese multinational corporations.

It is not about Tariffs for Huawei. That is a pretty obtuse statement about what's really going on? Back to normal for a Country that released COVID into the world is a stretch don't you think?
 

kapital98

Posts: 378   +333
ZTE used to be a major player and it never recovered from the US sanctions, for all intent and purposes the new administration is basically the same as the old one with more migrants coming from Mexico, looking at things right now it's Xiaomi that will take Huawei's place as the most prominent Chinese phone maker.
This seems to be the CCP's plan as well. When they decide who to invest in with grants and low-interest loans, they want to pick winners.

Xiaomi is a winner right now. Huawei is not. Depending on how things go it's easy to see the CCP pushing Huawei further into non-telecom businesses.
 

Watzupken

Posts: 342   +320
Survive they will because the government will prop them up just to show US that the company don't need them. But they will just exist as a zombie company. If they cannot find a lucrative product to sell in replacement of their mobile and 5G division, they can't get off the government life support system.
 

OortCloud

Posts: 651   +521
Coal mining - even China now acknowledges the IPCC findings that the global climate is f****d - sounds like the perfect business to move into.