Huawei Technologies Co’s significant profit declines in 2022 have laid bare the immense weight of sanctions being felt on the Chinese multinational.
Having been cut off from the US semiconductor market, Google’s Android operating system and the UK 5G network in recent years, Huawei posed its biggest-ever operating profit decline of -65%, from 121bn yuan (US$17.6bn) in 2021 to 42bln yuan in 2022.
Operating margins fell a full 12.5 percentage points.
At the same time, Huawei is deploying over a quarter of its revenues into research and development, as the group begins to explore new sectors such as electric vehicles and cloud computing to replace its hollowed-out smartphone business.
Rotating chairman Xu Zhijun was sanguine in the face of the significant challenges Huawei is facing.
“Plum blossoms tend to grow sweeter from a harsh winter’s freeze. Today, Huawei is like a plum blossom,” he poetically stated, continuing: “While it's true that we have considerable
pressure ahead of us, we have what it takes to come out the other end – with opportunities to grow, a resilient business portfolio, a unique competitive edge, the enduring trust of our customers and partners.”
But the finer print was more pragmatic about Huawei’s prospects, conceding that growth is expected to slow in 2023 and some markets “may even experience significant declines”.
However, Huawei is still privy to the largest markets outside of the US, and its bespoke HarmonyOS operating system has been deployed on 330 million devices globally.
Plus, top-line revenues actually rose year on year, although they remain below levels seen between 2018 and 2020.
“The strength of pines is most pronounced in the depths of winter, as are the ties that bind us,” mused Zhijun, but Huawei is certainly not out of the wood just yet.