Huawei announced its first-ever annual revenue decline in 2021 as US sanctions continue to hurt the company.
But the Chinese tech giant’s revenue jumped last year as it focused on increasing profitability.
“Despite declining revenue in 2021, our ability to make profits and generate cash flow is increasing, and we are better able to weather uncertainty,” Huawei chief financial officer Meng Wanzhou said in a statement. a statement.
Huawei’s annual report released on Monday is the first high-profile corporate event Meng has led since returning to China from Canada, where she was embroiled in a nearly three-year extradition battle with the United States. Meng spoke at a press conference at Huawei’s headquarters in Shenzhen.
In 2021, Huawei achieved revenue of 636.8 billion Chinese yuan ($99.9 billion), down 28.5% year-on-year. This is the first annual drop in revenue based on publicly available reports dating back to 2002.
Meng told a press conference on Monday that U.S. sanctions, “supply continuity challenges” and slowing 5G demand in China were the main reasons for the drop in revenue.
Last year, net profit rose 75.9 percent year on year to 113.7 billion yuan.
Under former US President Donald Trump, Huawei was put on a US blacklist called the Entity List, which blocked US companies from exporting key components and software to the company. Washington has sought to cut off Huawei’s access to the high-end chips needed for its smartphones and other hardware. Huawei’s global smartphone market share plunged as a result.
Meanwhile, the United States has called Huawei a national security threat and urged other countries not to use their telecommunications equipment for next-generation 5G mobile networks. Huawei has repeatedly denied it poses a national security threat.
These moves had a significant impact on the company’s business units. Huawei’s consumer division, which aggregates sales of smartphones and other products, brought in 243.4 billion yuan in 2021, down nearly 50% year-on-year.
The carrier business, which includes telecommunications equipment sales, posted revenue of 281.5 billion yuan, down about 7 percent year on year.
A bright spot for the company was its fledgling enterprise business, its smallest division currently, but one that Huawei is focusing heavily on to take over. Huawei’s business unit includes cloud computing.
To counter US sanctions, Huawei is investing heavily in new areas, including the automotive industry, and hiring more scientists to focus on technology development.
Huawei spent 142.7 billion yuan on research and development in 2021, slightly more than the 2020 figure of 141.9 billion yuan.
“Building on talent, scientific research and a spirit of innovation, we will continuously increase investments to reshape our paradigms for fundamental theories, architecture and software, and strengthen our long-term competitiveness,” said Guo Ping, rotating chairman of Huawei, in a statement. Press release.
Huawei is not a public company but publishes annual results which it says are audited by accounting firm KPMG.