Huawei Claims Breakthrough Despite Profit Decline
© Provided by BenzingaHuawei Technologies posted its biggest ever dividend cut last Friday, CNBC reported. The Chinese giant blamed rising commodity prices, China's tighter epidemic controls and US sanctions. However, it should be noted that the 2021 comparisons are due to the one-time gains associated with sales of mid-range smartphones.
Number 2022
During the earnings call, Acting Chairman Eric Xu described the past year as a difficult external environment that affected Huawei's operations.
The Chinese telecommunications giant expects a net profit of $5.18 billion (35.6 billion yuan) in 2022. However, this is still a sharp drop in 2020, dropping to 44%.
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Revenue rose 0.9% to 642.3 billion yuan in 2021 after the company saw sales fall by more than 28% on the year as US export controls hit its strong smartphone business. However, this small increase is still a far cry from the record 891.3 billion yuan in 2019, when Huawei was the leading Android smartphone vendor globally.
Huawei's R&D costs rose 13.2 percent to 161.5 billion yuan ($23.50 billion), or a quarter of its total revenue as it replaced some products subject to US trade sanctions. In February, founder Ren Zhengfei notified the university that the company replaced more than 13,000 parts.
The asset-liability ratio is 58.9 percent, and net cash is 176.3 billion yuan.
Smartphone activity is corrupted
During 2019 and 2020, US sanctions deprived the Chinese tech giant of key technologies and components such as Google's Android operating system and semiconductors. As a result, the consumer electronics business fell by 11.9% to 214.5 billion yuan in 2022, but it is still significantly lower than the 2021 decline.
In response to the fine, Huawei launched its own operating system, and Harmonios is said to be installed on 330 million devices by the end of 2022, up 113 percent year-over-year. Unfortunately, adoption outside of China did not happen.
Telecommunications business
Equipment sold to service providers generated revenue of 284 billion yuan, up 0.9% after a 2021 decline. In recent years, the US has asked countries to ban Huawei from next-generation 5G networks, and the UK has sued and Germany is reportedly considering banning some of its equipment.
Cloud computing
Huawei's corporate business, which partially includes cloud computing revenue, grew 30% year on year to 133.2 billion yuan in revenue. For the first time, Huawei's own cloud computing business achieved annual revenue of 45.3 billion yuan.
automotive sector
Huawei responded to the threat by diversifying its business. One such move is joining the EV bandwagon with automaker Ceres. Since its founding in 2019, Huawei has invested US$3 billion in its Smart Car Solutions division and currently has annual revenue of 2.1 billion yuan.
2022 is the year of "getting out of the crisis".
Meng Wanzhou, the daughter of the company's founder who was jailed in Canada for three years for violating US sanctions, said Huawei's chief financial officer was back to business as usual. In addition to a moderate increase in revenue, the company has made significant progress in replacing components affected by the ban, he said.
The rise of China's chip industry
Also on Friday, a Chinese telecommunications company demonstrated a breakthrough in semiconductor design technology. Current president Eric Xu said Huawei is working with other domestic companies to develop the electronic chip design tools needed to manufacture semiconductors that are 14 nanometers or larger.
China's chip industry relies heavily on foreign technology and has prioritized self-sufficiency in its technology battle with the United States, but companies with the desired standards are still in short supply. For military purposes. Huawei sees green development as an opportunity and plans to release 5.5G products in 2025.
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