After US sanctions, Huawei faced the biggest losses in its history

For Huawei, once one of the largest smartphone manufacturers in China and the world, there are only dark clouds for now. Huawei reported record annual profit declines as US sanctions continue to affect its business and strict pandemic controls in China put pressure on the company.

The sky is dark cloudy for Huawei

The Chinese technology giant announced that its net profit decreased by 69 percent year on year to $5.18 billion in 2022. The biggest decline before that was in 2011 and it was at the level of 54 percent. Huawei cited rising commodity prices, China’s tight pandemic controls last year, and an increase in research and development spending as reasons for the drop in profits. Despite this, the firm managed to increase its revenues by 0.9 percent in 2022, raising it to $96.6 billion (642.3 billion yuan).

Huawei no longer sees the mobile side as its main focus and has been trying to enrich its business areas for a while. This is why the company enters new fields such as cloud computing and automotive. The money spent on R&D is also seen as a necessity to save the future of the company.

Huawei’s smartphone division made $31.1 billion in revenue, down 11 percent, while the telecommunications division made $41 billion, up 0.9 percent. The US has been urging countries to ban Huawei from next-generation 5G networks for the past few years. Countries like the UK have already done this, while Germany is known to be considering banning some Huawei equipment on 5G networks.

New investment areas give what is expected

Huawei’s corporate division, which includes some of its cloud computing revenues, increased by 30 percent compared to the previous year, reaching $19.3 billion in revenue. The revenue generated by cloud computing alone is 6.5 billion dollars. Huawei has also joined China’s electric car boom, launching vehicles in partnership with automaker Seres. Huawei announced that its newly emerging “Intelligent Automotive Solutions” unit brought in $305 million in 2022.

Meng Wanzhou, Huawei’s CFO, said the company’s results were “in line with forecasts” and said the tech giant’s financial condition “remains solid”. It looks like Huawei is far from bankrupt, but those old smartphone successes aren’t likely in the near future either. Because HarmonyOS is having difficulties being adopted outside of China.