Huawei’s comeback: 2023 revenue approaches $100B with smart devices gaining ground
Huawei expects to report revenue exceeding 700 billion yuan ($98.5 billion) for 2023, according to comments from rotating deputy chairman Ken Hu in an internal new year message seen by Reuters. 
Mr. Hu Houkun (Ken Hu), Huawei’s deputy chairman Photo Credit: Huawei
That optimistic forecast offers further evidence that Huawei is rebounding after U.S. sanctions starting in 2019 crippled some of its business lines by restricting access to critical global technologies such as advanced chips.
“Thanks to our partners across the value chain for standing with us through thick and thin. And I’d also like to thank every member of the Huawei team for embracing the struggle – for never giving up,” Hu said.
“After years of hard work, we’ve managed to weather the storm. And now we’re pretty much back on track.”
“In 2023, we expect to wrap up the year with over 700 billion yuan [US$98.9 billion] in revenue,” he added. That would be a 9% increase on sales from 2022, when the comparable rate of global telecom revenue growth was less than 1%.
Indeed, 2023 has been a very difficult year for telecom network equipment makers such as Ericsson and Nokia. Ericsson’s revenues for the first nine months fell 7% on a constant-currency basis. Nokia’s were down 3%.
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What sectors might be responsible for the 9% sales growth Huawei expects this year? From the first paragraph of Ken Hu’s commentary.
“Our ICT infrastructure business has remained solid, and results from our device business surpassed expectations. Both our digital power and cloud businesses are growing steadily, and our intelligent automotive solutions have become significantly more competitive.”
Huawei’s improvement might be due to the upbeat performance of its devices business which includes smartphones and smartwatches. In 2020, the company’s consumer unit accounted for about 54% of all Huawei’s revenues, but its sales halved the following year. It was badly hurt by sanctions because smartphones have a greater need than networks do for advanced chips. Huawei was also cut off from Google software that runs on other Android smartphones. Its response to all this included the sale of Honor, a big smartphone subsidiary.
This past August, Huawei launched its Mate 60 series of smartphones, which are believed to be powered by a domestically developed chipset. The release was widely viewed as marking Huawei’s comeback into the high-end smartphone market after years of struggling under U.S. sanctions.
Huawei’s smartphone shipments surged 83% in October year-on-year, helping the overall Chinese smartphone market to grow 11% over the same period, according to Counterpoint Research which wrote:
Huawei’s success and climb in the rankings has been helped by the recent launch of its Mate 60 series 5G phones and popularity of its older P-series 4G devices. “The company is posting some very good growth numbers, but obviously there’s base effects happening,” notes China analyst Archie Zhang. “We expect it will grow by more than half this year, but that still doesn’t bring them close to pre-COVID levels. But it’s signalling a promising 2024.”
Huawei’s smartwatch business is doing very well. Counterpoint’s Woojin Son wrote:
“There is significant value in examining the growth drivers of the global smartwatch market in Q3 2023. Amid a global economic slowdown, most consumer device markets like smartphones are still experiencing stagnation compared to a year ago. In contrast, the smartwatch market has recorded YoY growth for two consecutive quarters in both premium and budget segments. Notably, High-level Operating System (HLOS)* smartwatches, typically featuring higher specification and price, have grown largely driven by Huawei in Q3 2023 as the company posted its highest quarterly performance ever. Most of this surge occurred in the Chinese domestic market, coupled with the launch of new Huawei 5G smartphones.”
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Looking ahead to 2024, Huawei said in the letter the device business would be one of the major business lines it would focus on for expansion. “Our device business needs to double down on its commitment to developing best-in-class products and building a high-end brand with a human touch,” the letter said.
Missing from Hu’s remarks was any reference to Huawei’s profits, which plummeted 69% last year, to just RMB35.6 billion ($1 billion).
Huawei watchers will probably have to wait until the publication of its 2023 annual report for an update. For sure, the company is cutting costs. “We will continue to streamline HQ, simplify management, and ensure consistent policy, while making adjustments where necessary,” said Huawei’s chairman.
Yet the company will likely continue to ramp up R&D spending. RMB161.5 billion ($22.8 billion) was spent on R&D in 2022, about a quarter of total revenues and a 13% year-over-year increase. Expect a similar increase for 2023 and 2024.
References:
Singles Day Growth Boosts Odds of China Market Smartphone Recovery in Q4 2023
Global Smartwatch Market Rebounds; Huawei and Fire-Boltt Hit New Peaks