Huawei reports sharply slower growth as US sanctions take a toll

April 01, 2021 ideaTechX

Revenue growth for Chinese telecommunications equipment maker Huawei fell dramatically in 2020 as overseas sales shrank in the wake of US sanctions and disruptions caused by the Covid-19 pandemic, the company reported on Wednesday.

Why it matters: The decline comes as Huawei’s revenues shrank in all markets but China. Huawei was placed on a US trade blacklist in 2019, blocking the company from sourcing US-made components without permission.

  • Huawei has faced pushback across international markets as countries around the world place restrictions on rolling out the company’s telecommunications equipment.

  • Huawei’s smartphone sales have fallen drastically since the ban. In the fourth quarter of 2020, Huawei shipped just 33 million handsets globally, down 41% year on year, data from Counterpoint Research showed.

Details: Huawei’s revenue reached RMB 891.4 billion in 2020, up 3.8% year on year, but down from an annual growth rate of 19.1% in 2019.

  • The company saw revenue from its consumer business—which includes smartphones, tablets, and computers—fall off a cliff. Growth in this segment fell from 34% in 2019 to 3.3% last year.

  • “The US restrictions have impacted our business, especially our mobile phone business, and that resulted in modest growth last year,” Ken Hu, Huawei’s rotating chairman, said during a press conference on Wednesday.

  • Sales from the company’s enterprise business were a bright spot, increasing 23% year on year to reach RMB 100 billion. Revenue from its carrier business increased just 0.2% annually to RMB 300 billion, slowing from 3.8% in 2019.

  • The company’s net profit hit RMB 64.6 billion, up 3.2% on the year but slower than the 5.8% in 2019.

  • China accounted for much larger portion of the company’s overall sales. The country made up nearly two-thirds of its revenue last year. In 2019, sales from China accounted for just under 60% of its revenue.