No stopping Huawei: 1st half 2020 revenues rose 13.1%, to $64.9 billion despite U.S. led boycott; ~60% of biz from China!

Huawei Technologies Co Ltd, the #1 telecom equipment company #2 smartphone maker, reported a 13.1% rise in revenue in the first half of the year, showing slower growth as U.S. officials continue to pressure the company’s suppliers and customers.  Revenue rose to 454 billion yuan ($64.90 billion) in the first half of the year. ($1 = 6.9958 Chinese yuan renminbi or RMB).  That was compared to 401.3 billion yuan revenues the year before. Huawei’s growth rate was down from 23.2% in the first half 2019. Huawei said net profit margins were 9.2%, up from 8.7% in the first half 2019.

Reuters

FILE PHOTO: Huawei’s new flagship store is seen ahead of tomorrow’s official opening in Shanghai, following the coronavirus disease (COVID-19) outbreak, China June 23, 2020.

REUTERS/Aly Song/File Photo: REUTERS

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The Chinese behemoth technology company posted the report a day before United Kingdom officials are expected to order the removal of Huawei gear from the nation’s telecommunications networks.

The results were published as Huawei fights a U.S.-led campaign to ban it from Europe’s 5G markets and choke off its supplies of components based on U.S. design expertise or manufacturing technology.  Speculation has risen that UK authorities will this week move to exclude Huawei from the country’s 5G market just months after saying they would restrict it to 35% of any radio access or fiber broadband network.

The UK government previously thought such restrictions – combined with a ban on Huawei in the intelligent “core” of any network – would mitigate the risk and minimize disruption to service providers reliant on Huawei technology.

But security watch dogs are now worried the latest U.S. sanctions would heighten risks and potentially threaten Huawei’s ability to continue serving UK operators.

While other European governments and operators have similar concerns, Huawei has been able to rely on a 5G rollout in China for sales growth.

Victor Zhang, the company’s head of government affairs, told UK officials last week that Huawei will this year erect about half a million base stations for Mobile, Telecom and Unicom, China’s three national operators.

The company has referred to the scale of the Chinese deployment in refuting suggestions it may run out of components early next year. With the current 35% cap on its UK role, it needs components for only about 20,000 UK base stations, which it can easily supply through existing inventory, said a Huawei spokesperson.

A breakdown of the figures released today indicates growth in all three of Huawei’s business lines.

At the carrier division, which develops network products for communications service providers, sales were up 9%, to RMB159.6 billion ($22.8 billion), despite coronavirus-triggered lockdowns in some of Huawei’s most important markets.

While Huawei did not provide a regional breakdown of the numbers, a Chinese splurge on 5G equipment is likely to have fueled the increase given the pressure elsewhere.

Last year, the Chinese market accounted for nearly 60% of Huawei’s entire business, a figure that proves any European restrictions would have only a limited effect on the company.

Huawei’s relatively small enterprise business managed a 15% increase in sales, to RMB36.3 billion ($5.2 billion), while its device-making consumer business – which last year blamed U.S, sanctions for wiping about $10 billion off sales – said revenues were up 16%, to about RMB255.8 billion ($36.6 billion).

“Our business depends on delivering what our customers need,” said Zhang in a prepared statement about the latest numbers. “These results show that they continue to choose Huawei when they want reliability, security and value.”

Zhang said: “Our priority here is to build a better-connected UK where everyone can benefit from 5G and fiber broadband, no matter where they live.”

BT and Vodafone, the UK operators most heavily reliant on Huawei’s products, have told UK officials they need at least five years to phase out the Chinese vendor.  Anything less and customers would face major disruption, including outages as equipment is replaced, said technology executives during a parliamentary committee last week.

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Huawei’s rise in sales comes after more than a year of pressure from American officials on the company’s suppliers and customers. The company sells 5G networking equipment to carriers and smart phones and laptops to consumers.

American officials placed Huawei on a blacklist in May of last year, restricting sales to the company of U.S.-made goods such as semiconductors. Huawei built up inventories and also continued to design its own chips and have them manufactured by Taiwan Semiconductor Manufacturing Co Ltd and others.

“Huawei has promised to continue fulfilling its obligations to customers and suppliers, and to survive, forge ahead, and contribute to the global digital economy and technological development, no matter what future challenges the company faces,” the company said in a statement on Monday.

In May, U.S. officials announced new rules aimed at constricting Huawei’s ability to self-supply chips, an ability that is critical to its efforts to sell 5G networking gear.

The first half results showed faster growth than Huawei’s first quarter results released in April. For the first quarter, revenues rose by about 1% to 182.2 billion yuan, versus 39% growth posted a year previous. Net profit margin in the first quarter narrowed to 7.3% from about 8% a year earlier.

Huawei did not report unit shipments of phones. Research firm IDC reported Huawei was the second largest phone maker in the first quarter of 2020, with 17.8% market share, behind No. 1 Samsung Electronics Co Ltd and ahead of No.3 Apple Inc.

References:

https://www.usnews.com/news/technology/articles/2020-07-13/huawei-reports-131-rise-in-first-half-revenue

https://www.lightreading.com/asia/huawei-books-$1b-growth-in-h1-profit-despite-us-led-backlash/d/d-id/762360?

2 thoughts on “No stopping Huawei: 1st half 2020 revenues rose 13.1%, to $64.9 billion despite U.S. led boycott; ~60% of biz from China!

  1. Doesn’t look like U.S. “rip and replace” orders to rural wireless carriers or UK boycott of Huawei network equipment will make a dent in their revenues as long as China 5G and fiber deployments increase! Hard to believe that ~60% of Huawei’s revenues come from China!

  2. After months of U.S. pressure, U.K. bans China’s Huawei from its 5G network

    The United Kingdom announced Tuesday that Huawei would be banned from its high-speed 5G telecommunications network, in a decision that will anger China but please the United States.

    The role of the Chinese tech giant has become a central theme in London’s increasingly uneasy relationship with Beijing.

    The U.K. has faced months of pressure from Washington, which says Huawei is a security risk because the company could be used by the Chinese government to spy on the West. Both China and Huawei have repeatedly denied this.

    “There’s no such thing as a perfectly secure network,” Media Secretary Oliver Dowden told the House of Commons, but he said that the U.K. had to make sure its system was “as secure as it possibly can be.”

    He announced that all new Huawei 5G equipment would be banned in the U.K. starting next year, and that the government would remove all of the company’s existing infrastructure by 2027.

    The decision attempts to balance technology, geopolitics and the practical impact on consumers. Dowden conceded that banning Huawei would delay the U.K.’s 5G rollout by two years and cost up to 2 billion pounds, around $2.5 billion.

    “This disappointing decision is bad news for anyone in the UK with a mobile phone. It threatens to move Britain into the digital slow lane, push up bills and deepen the digital divide,” Huawei’s U.K. spokesman Ed Brewster said in a statement.

    The decision had become “politicized,” he added, and was more about U.S. trade friction with China than real security concerns. The company will now conduct a detailed review of the decision and continue to work with the U.K. government to “explain how we can continue to contribute to a better connected Britain,” he said.

    The U.K.’s widely anticipated decision came after a meeting earlier Tuesday of Britain’s National Security Council, which was chaired by Prime Minister Boris Johnson.

    Back in January, Johnson attempted a compromise that he hoped would placate both Beijing and Washington. Huawei was to be allowed a limited role in building the country’s 5G network, but prevented from accessing “sensitive” core areas and those near military or nuclear sites.

    Tuesday’s announcement was a reversal of that move. The official reason was that U.S. sanctions on Huawei, banning it from using American microchips, would make the Chinese company’s technology unreliable in the future.

    https://www.nbcnews.com/news/world/after-months-u-s-pressure-u-k-bans-china-s-n1233752

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