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Huawei’s revenue takes a hit as US sanctions begin to bite

Tech giant redirects to smart agriculture, healthcare and electric cars as smartphone sales dip


New direction: Ren Zhengfei, founder and chief executive officer of Huawei Technologies. Photo: Qilai Shen/Bloomberg

New direction: Ren Zhengfei, founder and chief executive officer of Huawei Technologies. Photo: Qilai Shen/Bloomberg

New direction: Ren Zhengfei, founder and chief executive officer of Huawei Technologies. Photo: Qilai Shen/Bloomberg

Huawei Technologies' quarterly revenue shrank for the first time on record, reflecting the devastating impact of US sanctions that forced China's largest technology company out of smartphones and into other technology arenas.

The disappointing results underscore the depth of the damage Washington has wrought on a company that once vied with Apple and Samsung to lead the global smartphone market.

It reported revenue fell 11pc to 220.1bn yuan (€28.5bn) in 2020's final quarter. That's down from 3.7pc growth in the September quarter and 23pc in the second quarter, according to Bloomberg calculations based off previously reported figures.

Full-year sales and profit rose 3.8pc and 3.2pc, respectively, in line with the "marginal growth" previously projected, according to financial statements audited by KPMG. Huawei had credited record 5G base station orders and strong mobile sales in the first half for offsetting the final six months.

Huawei is emerging from its toughest year on record, when Trump-administration sanctions smothered its once leading smartphone business and stymied advances into chipmaking and fifth-generation networking.

The Biden White House has shown few signs of letting up, prompting billionaire founder Ren Zhengfei to direct Huawei toward new growth areas such as smart agriculture, healthcare and electric cars. It hopes for a seat at the table with tech giants vying to define the rapidly evolving fields of connected vehicles, homes and workplaces.

"The global supply chain Huawei heavily relies on has been disrupted," said chairman Ken Hu, one of three executives who take turns filling the top role. "I don't know who will benefit from it but definitely not the industry."

The global semiconductor supply chain needs to be overhauled in order to resolve the current shortages, he added.

Cash flow weakened last year as the company built up inventories ahead of US sanctions that effectively cut off its access to American technologies last September and it has enough stockpiles for its enterprise business, Mr Hu told reporters.

Huawei had previously purchased $10bn (€8.5bn) to $20bn of components each year from American. suppliers and other customers won't be able to fully make up for the lost business.

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Huawei's consumer electronics unit – which still accounts for more than half of total revenue – missed sales targets, he added.

Huawei's smartphone shipments tumbled 42pc during the final three months of last year to lag behind Apple, Samsung and domestic rivals Xiaomi and Oppo, according to research firm International Data Corp.

The firm intends to keep launching flagship phones as planned, while it builds up other consumer electronics, like wearables, which grew by 65pc last year, Mr Hu said.

Huawei is the subject of persistent speculation it wants to join tech giants from Apple to Xiaomi in exploring automotive tech or designing and assembling entire cars.

The firm has denied it plans to launch an own-brand car but has tested its autonomous driving and driver-car interaction technologies.

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