Huawei revealed its biggest-ever decline in revenue in the first half of 2021 – it fell by almost 30% to Rmb320 billion (£35.5 billion).
The firm sold part of its mobile phone business following US sanctions, which analysts say contributed to the drop.
Sanctions make it hard for Huawei to buy components and software using US technology.
Revenue from Huawei’s consumer electronics arm, which includes phones, fell by 47%.
Huawei also cited the effect of the chip shortage on its business.
Earlier this year the company’s consumer devices chief acknowledged the challenges it faced: “US sanctions have posed great difficulties to our business operations and day-to-day work,” Richard Yu, said as the company announced the launch of a new phone.
The sanctions have also effectively prevented Huawei devices from working fully with Google’s Android Operating system, prompting the firm to expand the use of its own Harmony OS .
Slow rollout
Huawei’s telecoms equipment business also saw a decline in revenue.
A spokesperson for the company told Reuters this was due to the slow rollout of 5G in China.
But sales outside China increased, in spite of US pressure on its allies to exclude Huawei from 5G infrastructure over concerns about national security.
Huawei denies allegations that its equipment poses a security risk, and has called the claims politically motivated.
The company saw growth from its enterprise and cloud services businesses.
Efficiency improvements also saw profit margins increase, it said.
In a statement, Chairman Eric Xu said: “Our aim is to survive, and to do so sustainably,”
The company was founded in 1987 by Ren Zhengfei, a former Deputy Regimental Chief in the People’s Liberation Army.Initially focused on manufacturing phone switches, Huawei has expanded its business to include building telecommunications networks, providing operational and consulting services and equipment to enterprises inside and outside of China, and manufacturing communications devices for the consumer market. Huawei has over 197,000 employees as of December 2020.
Huawei has deployed its products and services in more than 170 countries and areas. It overtook Ericsson in 2012 as the largest telecommunications equipment manufacturer in the world, and overtook Apple in 2018 as the second-largest manufacturer of smartphones in the world, behind Samsung Electronics. In 2018, Huawei reported that its annual revenue was US$108.5 billion. In July 2020, Huawei surpassed Samsung and Apple to become the top smartphone brand (in number of phones shipped) in the world for the first time. This was primarily due to a drop in Samsung’s global sales in the second quarter of 2020, owing to the impact of the COVID-19 pandemic
Although successful internationally, Huawei has faced difficulties in some markets, due to claims of undue state support, links to the People’s Liberation Army, and cybersecurity concerns—primarily from the United States government—that Huawei’s infrastructure equipment may enable surveillance by the Chinese government With the development of 5G wireless networks, there have been calls from the U.S. and its allies to not do any kind of business with Huawei or other Chinese telecommunications companies such as ZTE.Huawei has argued that its products posed “no greater cybersecurity risk” than those of any other vendor and that there is no evidence of the U.S. espionage claims. Questions regarding Huawei’s ownership and control as well as concerns regarding the extent of state support also remain. Huawei has also been accused of assisting in the surveillance and mass detention of Uyghurs in the Xinjiang re-education camps, which have resulted in sanctions by the United States Department of State. Huawei tested facial recognition AI capable of recognizing ethnicity-specific features to alert government authorities to members of the ethnic group.
