Profit in China Huawei Technologies’ fell 52% in the first half as tough economic conditions reduced customer demand, adding to the carnage caused by US sanctions.
The Chinese tech firm’s profit margin narrowed to 5%, with net profit of 15.1 billion yuan ($2.23 billion), according to calculations, from 31.39 billion yuan in the first half of 2021. Revenue fell 5.9% year-on-year during the period to 301.6 billion yuan ($44.73 billion).
A weak economy, Covid disruptions and supply chain challenges have hurt the company’s device business which sells smartphones and laptops, a company spokesperson said. Revenue from this business fell by more than a quarter to 101.3 billion yuan. Increased investment in new technologies and businesses also weighed on earnings, he said, but his carrier and enterprise businesses both saw growth.
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Second-quarter sales in China’s broader smartphone industry fell 14% year-on-year, while volumes hit their lowest level in a decade, Counterpoint Research said last month.
The The United States has placed Huawei on an export blacklist in 2019 that blocked it from accessing critical US-sourced technology, hurting its ability to design chips and source components from outside vendors.
The ban devastated the company’s once-dominant handset business.
Huawei is building new business areas, including intelligent automotive components and energy efficiency systems, with its cloud service company, taking 18% of China’s growing market, according to consultancy Canalys.
Huawei also deployed its own Harmony OSwhich is now used over 300 million Huawei devices.
“We will leverage digitalization and decarbonization trends to continue to create value for our customers and partners, and ensure quality development,” Hu said.
- Reuters with additional editing by Jim Pollard
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