Huawei’s H1 Revenues are Reeling From American Sanctions

Huawei logo on a smartphone with the American and Chinese flags

The Chinese technology giant saw its revenues decrease 29.4% year-over-year.

Although Huawei is enjoying a slight increase in its net profit margin from 9.2% in 2020 H1 to 9.8% in 2021 H1, revenues are down sharply. Totaling only $49.5 billion, Huawei is feeling the effects of the U.S. imposed sanctions. Its chairman, Eric Xu, did not seem very worried about the decline. “Despite a decline in revenue from our consumer business caused by external factors, we are confident our carrier and enterprise businesses will continue to grow steadily,” said Xu. “Our aim is to survive, and to do so sustainably,” he continued.

Security concerns are at the center of the Huawei-U.S. divide. Many fear that the Chinese government could push for sensitive information from Huawei. Providing this information would put the data of millions of Americans at risk. The FCC has already allocated nearly $2 billion to replace equipment in wireless infrastructure from Chinese companies with other countries also looking to phase out the company’s equipment. So far, 2021 has not been kind to the company, but Xu is confident in keeping Huawei on course after readjusting its forecasts.

“2021 will be another challenging year for us, and it’s also the year that our future development strategy will begin to take shape. We have spent a long time reviewing and adjusting our business portfolios and are confident in our ability to survive and do so sustainably. There is currently a lot of growth momentum in the Chinese economy, and overseas markets are gradually recovering from COVID-19. We believe deeply in the power of digital technology to provide fresh solutions to the problems the world is facing right now,” Xu said in April 2021.

Complications from the COVID-19 continue to affect economies around the world and manufacturing. There is a chipset shortage in the electronics industry. The shortage is affecting a wide range of industries as technology continues to expand into even more areas of our lives. These issues add to Huawei’s problems and are all in a world in which 5G is still just getting started. China is set to be one of the largest markets for 5G as will the United States, but adoption and deployment will take years.

Cybersecurity and improving 5G infrastructure are two focal points for President Joe Biden and the U.S. government. There have been several attacks in the United States that have affected infrastructure during a time when 5G is deploying nationwide. Huawei did not believe much would change once the Biden administration took over for President Trump and this appears to be correct so far. Even after testing President Biden through a lawsuit, Huawei remains in the U.S. Commerce Department’s Entity List.

Because Huawei is on the Entity List, it is required to have a license from the American government to conduct business with U.S.-based companies. The biggest repercussion involves the aforementioned chipset shortage. Huawei relied on its relationship with Taiwan Semiconductor Manufacturing Co. Ltd as a supplier of semiconductors, a critical component in electronics. For now, the sanctions continue to sever this relationship making it harder for Huawei to operate. There is no end in sight but Huawei continues to roll with the punches even if it is experiencing less than favorable numbers. Time will tell as to what the ultimate resolution will be but as long as China continues its impressive investment in 5G, Huawei will continue to seek solutions through the market to generate revenue.

Source: RCR Wireless