Huawei books $1B growth in H1 profit despite US-led backlash

Defying US efforts to destroy its business, Huawei is trumpeting a huge increase in sales for the first six months of the year as China's rollout of 5G networks picks up speed.

In a short update on Monday afternoon, the Chinese vendor claimed revenues for the first half rose 13.1%, to a massive 454 billion Chinese yuan ($64.9 billion), compared with the same period last year.

Huawei flagged an even more dramatic increase in net profit, saying this was up nearly a fifth, to about RMB41.8 billion ($6 billion).

The results were published as Huawei fights a US-led campaign to ban it from Europe's 5G markets and choke off its supplies of components based on US 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 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 watchdogs are now worried the latest US 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 basestations for Mobile, Telecom and Unicom, China's three national operators.

The company has referred to the scale of the Chinese deployment in rubbishing 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 basestations, 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.

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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 US 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."

Commenting on the UK situation, 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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— Iain Morris, International Editor, Light Reading

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