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Huawei has had its biggest-ever dip in revenue, from two years into Washington's sanctions which battered both its network infrastructure and smartphone sales and the company's crucial access to semiconductors.
August 9, 2021
By Pádraig Belton
Huawei has had its biggest-ever dip in revenue, from two years into Washington’s sanctions which battered both its network infrastructure and smartphone sales and the company’s crucial access to semiconductors.
The stricken Shenzhen giant is now attempting a “pivot to software”, led by its HarmonyOS operating system, amid what its rotating chairman Eric Xu (pictured) diplomatically calls “a decline in revenue from our consumer business caused by external factors”.
This consumer electronics business was hardest hit, its revenues down a yearly 47% to RMB120 billion ($18.5 billion) in the company’s first half revenues. It sold its mid-range Honor smartphone business entirely last November, to give the company a chance at surviving the US sanctions. The real winner of Huawei’s retreat from the smartphone market, which it had briefly led a year ago, is Chinese rival Xiaomi, the world’s second biggest smartphone maker in the last quarter with 49.9 million sales, according to Omdia.
Infrastructure sales, such as radios for new 5G networks, dropped 14.2% to RMB136.9 billion ($21.1 billion), though the company pointed out part of this was also due to a slowing Chinese 5G rollout. Altogether revenues dipped 29.4% in the rout, to RMB320.4 billion ($49.5 billion).
Only Huawei’s enterprise business, offering digital solutions for things like smart cities and transportation, grew by 18.2% to RMB42.9 billion ($6.6 billion), alongside public cloud for mainland China, by roughly 20%. It currently has a 20% market share in China’s cloud market, half Alibaba’s 40% but with key wins in the automotive sector, Internet customers, and government projects.
HarmonyOS, which it has now installed on about 50 million smartphones and other devices since June, detaches the company from relying on Google’s Android operating system. (Google has banned Huawei devices from receiving software updates since last August. In a rebuff, Honor says it will continue to use Android, and promises Google apps and services will return to its smartphones.)
So far, the “software pivot” includes a $100 million investment in startups throughout South East Asia to build up its Huawei Mobile Services ecosystem. It also has a considerable stream of safe income in the meantime through revenues from 5G patents it owns.
“Our aim is to survive” the next five years, but 2021 will be a “challenging year”, says Xu. Snatching Alibaba’s cloud crown will figure large in its blueprint for doing this.
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