Huawei pours into R&D as profits fall

Huawei pours into R&D as profits fall

Erix Xu_Huawei 2022 Annual Results.jpg

Huawei has poured 25.1% of its 642.3 billion yuan revenue back into research as its revenues fell for the first time in a decade.

The Chinese vendor posted 35.6 billion (US5.2 billion) yuan in net profits, a year-on-year decline of 69%.

Although the year-ago comparison was inflated by the sale of its Honor smartphone brand to a consortium of buyers.

"In 2022, a challenging external environment and non-market factors continued to take a toll on Huawei's operations", said Eric Xu, Huawei's Rotating Chairman, at the company's annual report press conference.

"In the midst of this storm, we kept racing ahead, doing everything in our power to maintain business continuity and serve our customers.

“We also went to great lengths to grow the harvest – generating a steady stream of revenue to sustain our survival and lay the groundwork for future development."

In recent times, Huawei has changed its business model to focus on new revenue streams and has looked to diversify into new segments.

The company was added to the US Entity List in 2019, restricting its access to items produced domestically and abroad.

Since then, Huawei has been banned from several major countries around the world and struggled to sell its smartphones and watches outside of its domestic China.

In 2022, revenue from Huawei’s carrier, enterprise and consumer business was 284 billion yuan, 133.2 billion yuan and 214 billion yuan.

Its carrier business involves equipment it sells to telecoms operators worldwide, and that segment posted a slight increase of 0.9%.

The company has since pivoted its focus on electric vehicles and enterprise businesses as it looks to regain growth.

Moving forward, Xu noted that 2023 will be crucial to Huawei’s sustainable survival and development.

“While it's true that we have considerable pressure ahead of us, we have what it takes to come out the other end – with opportunities to grow, a resilient business portfolio, a unique competitive edge, the enduring trust of our customers and partners, and the courage to invest heavily in R&D,” he added.

“We are confident in our ability to rise above any challenge that comes our way, laying a solid foundation for sustainable survival and development."

Meng Wanzhou will take the reins as rotating chairwoman of the company – a shared role with each holder of the position taking helm of the company for six months.

Meng is the daughter of Huawei founder Ren Zhengfei. She returned to China in 2021 after being detained in Canada for three years over fraud charges after allegations emerged that Huawei-linked companies sold equipment to Iran.

Before her move to the position of rotating chairwoman, she served as CFO of the company.

On the financials, she said: “Our financial position remains solid, with strong resilience and flexibility.

“In 2022, our total R&D spend was CNY161.5 billion, representing 25.1% of our total revenue – among the highest in Huawei's history. In times of pressure, we press on – with confidence."

Gift this article