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China’s Huawei says first-half profit drops 52% as demand slows

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SHENZHEN, China: Huawei Technologies said on Friday that net profit has more than halved in the first half as a tough economy dampened customer demand, exacerbating the woes caused by US technology restrictions.

Sales for the period fell 5.9 percent year-on-year to 301.6 billion yuan ($44.73 billion), with a sharper decline in January-March.

“While our device business was heavily impacted, our IT infrastructure business continued to grow steadily,” said Ken Hu, Huawei’s rotating chairman, referring to the business-to-business enterprise unit.

The profit margin of the Chinese technology company fell to 5 percent, with a net profit of 15.08 billion yuan, according to Reuters calculations, from 31.39 billion yuan in the first half of 2021.

A weak economy, COVID-19 disruptions and supply chain challenges are hurting the device business of the company that sells smartphones and laptops, a company spokesperson said.

That company’s revenue fell by more than a quarter to 101.3 billion yuan. The carrier and enterprise businesses both saw growth.

Huawei also boosted investment in new technology and businesses, which impacted its profits.

In the second quarter, sales in the broader Chinese smartphone industry fell 14.2 percent year-on-year, while volumes were low for a decade, Counterpoint Research said last month.

The United States blacklisted Huawei for exports in 2019, denying it access to critical technology of American origin, harming its ability to design chips and purchase components from third-party suppliers.

The ban devastated the company’s once-dominant cell phone business.

Huawei is building new business lines, including smart auto components and energy efficiency systems, with its cloud services business, which takes 18 percent of China’s growing market, according to consulting firm Canalys.

Huawei has also rolled out its own Harmony operating system, which is now used on 300 million Huawei devices.

“We will leverage trends in digitization and decarbonization to continue to create value for our customers and partners and ensure quality development,” said Hu.

($1 = 6.7423 Chinese Yuan Renminbi)

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