Huaweis annual profit fell for the first time in more

Huawei’s annual profit fell for the first time in more than 10 years – 4 years of sanctions were not in vain

Chinese giant Huawei Technologies has been facing active sanctions pressure from the United States and its allies since 2019, but only now has the company faced a steady decline in annual profit, it says Bloomberg. Huawei’s net income fell 70% to $5.2 billion in 2022 for the first time in more than a decade.

Of course, the forced sale of the business related to the production of smartphones under the Honor brand, which formed an inflated earnings figure last year, affected the basis of comparison. The company invested about a quarter of last year’s sales, which reached $93.5 billion, in research and development. The latter has become key to the Chinese giant’s business as Western sanctions cut off the company’s entry into the market for mobile devices and communications network equipment. This percentage of R&D spending is one of the highest in the industry.

Eric Xu, Vice Chairman of the Board of Huawei Technologies, compared the current stage of the company’s business development to what is happening in nature: “After severe winter frosts, plum blossoms turn into sweeter fruits. Now Huawei resembles plum blossoms. In April, Xu must step down for six months as the daughter of Huawei founder and chief financial officer Meng Wanzhou, who is personally affected by the sanctions after almost three years of house arrest in Canada. Her father, Ren Zhengfei, will be 79 in October and has yet to decide on a successor who will run the company he founded full-time.

Huawei managed to slightly increase its income from the sale of equipment for communication networks to 41 billion dollars last year. Chinese telecom operators managed to add nearly 900,000 base stations to 5G networks last year, and Huawei was expected to be the supplier of most of that equipment. Now the Chinese giant is banking on industrial automation and communications, as well as collaborating with automakers who need to develop the digital component of transportation infrastructure. Partly to fill Huawei’s budget, licensing fees from other smartphone manufacturers allow it.

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Johnson Smith

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