Major risks ahead for Huawei despite first-half revenue surge

By Wei Sheng
1 min read
Liang Hua, chairman of Huawei, at a news conference at company headquarters in Shenzhen on July 30, 2019. (Image credit: TechNode/Jiayi Shi)

Huawei’s first-half revenue grew 23.2% year on year to RMB 401.3 billion ($58.3 billion), it said on Tuesday, sending out a powerful signal that the telecom giant continues to grow rapidly despite US sanctions and related risks ahead.

Why it matters: Huawei posted a strong showing for the first six months though the full impact of US technology restrictions is yet to emerge.

  • The Chinese telecom giant said US sanctions had caused some disturbances to its business, but the impact was controllable.
  • Business was growing rapidly before the US government added Huawei to the Entity List on May 16, though expansion continued thanks to what the company called “market inertia.”
  • Liang admitted that Huawei faces huge difficulties ahead with consumer business to be most affected. The degree of difficulty will depend on whether the US government allows the company to continue using Google’s Android operating system in future handsets.

“There isn’t one day that we stopped production, nor did we stop shipping to our customers after May 16.”

Liang Hua, chairman of Huawei, at the conference

Details: Despite the risk of losing access to Android, Huawei shipped 118 million smartphones worldwide in the first half, driven by an 18.1% increase in domestic handset sales.

  • The company secured a 34.3% share of China’s smartphone market in the first half, according to market research firm CINNO Research.
  • Revenue from Huawei’s consumer business, which sells smartphones, laptops, and other gadgets, was RMB 220.8 billion, and its carrier business generated income of RMB 146.5 billion, said the company.

Context: Huawei was added to the US Entity List earlier this year barring them from buying parts and components from US companies without the government’s prior approval.

  • Although the ban has been temporarily suspended and President Trump has expressed a willingness to use the Huawei case in his efforts to secure a trade deal, the suspension is still set to expire on August 19.