Huawei Reports First-ever Annual Revenue Decline Amid US Sanctions And A Surge In Profit

Technology fallen giant Huawei has amid the effects of the US sanctions against the company reported its first-ever yearly revenue decline on record for the year 2021. Its profits, however, enjoyed some positive notes. According to the company’s Chief Financial Officer, Meng Wanzhou, “Despite a revenue decline in 2021, our ability to make a profit and generate cash flows is increasing, and we are more capable of dealing with uncertaintly.”

The annual report released on Monday showed that the company’s revenue for 2021 stood at 636.8 billion Chinese yuan (almost a hundred billion in US currency) and suffered a decline of 28.5 percent from the previous year. This makes it the first time ever that the company would report a decline in revenue based on all its available public records since 2002.

On Monday, while speaking at a press conference, the company’s CFO Meng Wanzhou revealed the reasons for the decline. She blamed the US sanctions, continuous supply challenges and declining demand for 5G in China as major drivers of its revenue decline.

Amid all of these, the company’s net profit for 2021 surged 75.9 percent year-on-year to 113.7 billion yuan in 2021. Really impressive, if you ask anyone…

Huawei’s troubles started after it was placed on a US black list which caused a restriction on the exportation of important components and software by American companies to Huawei. The company was declared a national threat under the Donald Trump administration and the US urged other countries to not use Huawei’s telecommunication equipment for the next-generation 5G networks.

Huawei has come out numerous times to reiterate that it is not a national security threat to the US but this, unfortunately, have fallen on deaf ears. It has also asked other countries to not be wary of its 5G technology.

The company has suffered from the US sanctions since it was declared on a black list. Its consumer division unit which envelopes smartphone sales and other products, was down 50 percent in 2020 bringing in only 243.4 billion yuan. Its carrier business which sales of telecommunications equipment is categorized under, recorded revenue of 281.5 billion yuan and was down by about 7 percent year-on-year.

The company has ramped up efforts to deal with these challenges and has been focusing on its infantile enterprise business which houses its cloud computing unit. It has also been making huge and strategic investments in other new areas such as the automotive industry and has hired more scientists to scale this focus. In 2021, the company spent 142.7 billion yuan on research and development, showing how serious it is about diversifying its operations. In 2020, that figure stood at 141.9 billion yuan.

Emphasizing how highly the company places research and development, Guo Ping, Huawei’s rotating chairman, said via a press release that “Relying on talent, scientific research, and an innovative spirit, we will continuously increase investment to reshape our paradigms for fundamental theories, architecture, and software, and build our long-term competitiveness.”