Huawei’s profit halved as it researches blacklist workarounds

HUAWEI Technologies’ profit plunged 46 per cent in the first quarter of 2023 while revenue barely grew, as the Chinese telecommunications equipment maker spent heavily on research to try and get around US technology sanctions.

Net income dived to 3 billion yuan (S$579 million) in 2023’s first three months, showed Bloomberg News calculations based on the 2.3 per cent profit margin it announced on Friday (Apr 28).

That followed Huawei’s first annual profit decline in more than a decade, as years of US sanctions obliterated a once-thriving smartphone arm that competed with Apple and Samsung Electronics.

Huawei executives pledged to keep its research and development investment high to stay competitive in the market.

The Shenzhen-based company earlier disclosed 2022 research spending of 161.5 billion yuan, or roughly a quarter of its annual sales.

Huawei has made some progress in developing alternatives to US technology, including chip design tools and business software it can no longer buy from American suppliers such as Synopsys and Oracle.

Calling 2023 a “crucial year” for Huawei’s survival, the company expects to pursue more tech breakthroughs while tapping emerging demand from new markets such as ports and industry parks.

Sales edged up 0.8 per cent to 132.1 billion yuan in Q1, the first quarterly increase in three years.

Longer-term, Huawei remains vulnerable to US-Chinese tensions. Washington has imposed a series of restrictions on the country’s tech industry, including blacklisting companies such as Huawei and Semiconductor Manufacturing International Corp that are perceived as national champions.

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The US has also implemented strict controls on the export of chips and chipmaking equipment to China, effectively barring the world’s biggest contract chipmaker, Taiwan Semiconductor Manufacturing Co, from making cutting-edge silicon for Chinese clients such as Huawei. BLOOMBERG