"
x
Asia

Huawei H1 down 29% as handset business plunges

Huawei's business continues to reel under the pressure of US sanctions, its first-half numbers show.

Revenue declined 29.4% to 320.4 billion ($49.6 billion), with both carrier and consumer businesses recording double digit falls, the privately held company revealed Friday.

Consumer revenues plunged 47.0% to 135.7 billion yuan, reflecting the disposal of its mass market handset unit Honor as well as the loss of access to US chips and chip-making technology.

Count your blessings: It's not been the greatest year for Huawei, and the results reflect this - but there are a few spots of sunshine.   (Source: Karlis Dambrans on Flickr, CC 2.0)
Count your blessings: It's not been the greatest year for Huawei, and the results reflect this - but there are a few spots of sunshine.
(Source: Karlis Dambrans on Flickr, CC 2.0)

In a rare decline in its core carrier equipment business, sales were down 14.2% to 136.9 billion yuan.

From a quarterly perspective, the result looks even worse. Total Q2 revenue of 168.2 billion is off 38% compared with the same period last year, and appears to show Huawei's decline accelerating, following on from a 16.5% drop in Q1 and 11.2% in Q4.

Silver lining playbook

But the outlook may not be as bleak as it seems. The raw numbers don't fully represent the firm's dominance of the China network equipment market, now the world's largest.

Missing from the result are Huawei's successes in two multi-billion dollar tenders in the past month. It was awarded 60% of China Mobile's massive 700 MHz network contract – the industry's biggest contract of the year. It also won the biggest chunk of the latest China Telecom-China Unicom tender last week.

Thanks to this domestic dominance, Huawei anticipates moderate growth in carrier sales and is confident it can reach its corporate targets this year.

Another positive is the continued growth of its enterprise business. Unlike the two bigger units it is largely immune from US sanctions and in the first half revenue rose 18.2% to 42.9 billion yuan.

Much of the demand has been from cloud and digital transformation projects, the company said. Gartner ranks Huawei at number two China's IaaS market.

Mitigating losses

To offset the sharp decline of the handset business – global market share collapsed from 20% a year ago to 4% in Q1 – Huawei is placing bets on smart car solutions, its new Harmony handset OS and the broader software business.

It says it will maintain R&D spending at last year's level at around 16% of total revenue.


Interested in Asia? Check out our dedicated content channel here on Light Reading.


"We've set our strategic goals for the next five years," said Eric Xu, current chairman, said in a statement.

"Our aim is to survive, and to do so sustainably."

"Despite a decline in revenue from our consumer business caused by external factors, we are confident that our carrier and enterprise businesses will continue to grow steadily."

Related posts:

— Robert Clark, contributing editor, special to Light Reading

Be the first to post a comment regarding this story.
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE