Credit: Visual China

BEIJING, August 14 (TMTPost) – China’s Huawei Technologies (HWT.UL) released its operating performance for the first half of 2023 last Friday, with sales revenue of 310.9 billion yuan, a year-on-year increase of 3.1%.

Its net profit reached 46.63 billion yuan, a year-on-year surge of 209%, reversing the trend of continuously declining net profit margins.

Due to factors such as U.S. sanctions, Huawei has increased its research and development investment in recent years, leading to a decrease in net profit margins. The figure dropped from 8.2% in 2018 to 5.5% in 2022, being only 2.3% in the first quarter of 2023. Nevertheless, it suddenly soared to 24.38% in the second quarter. The company did not explain the reason for the increase. The last time it saw a significant increase in net profit margin was in 2021, resulting from the substantial gains from the sale of the Honor mobile phone business and the X86 server business.

Huawei stated that in the first half of 2023, the company’s overall operations were steady, and the results were in line with expectations. Among the major business segments, the revenue from core information and communications technology (ICT) infrastructure business was 167.2 billion yuan, consumer business revenue was 103.5 billion yuan, cloud computing revenue was 24.1 billion yuan, digital energy revenue was 24.2 billion yuan, and the Smart Car Solution business revenue was 1 billion yuan.

“In the first half of 2023, our ICT infrastructure business remained solid, consumer business revenue achieved growth, digital energy and cloud businesses saw good growth, and the competitiveness of incremental components for smart cars continued to improve,” said Meng Wanzhou, Huawei’s rotating chairperson and the daughter of its founder, Ren Zhengfei.

At the beginning of the year, Huawei changed the disclosure criteria for its performance, providing new data for the revenue of cloud computing, digital energy, and Smart Car Solution, which have no base for comparison.

The consumer business, centered around smartphones, is one of the few areas that remained relatively unchanged. Compared to the first half of 2022, Huawei’s consumer business revenue increased by 2.17%, rebounding from a decline. This business was heavily affected by U.S. sanctions, losing a significant number of overseas customers due to the lack of 5G chips and US mobile software. Its revenue nearly halved from its peak of 255.8 billion yuan in the first half of 2020 to 135.7 billion yuan in the first half of 2021, and further decreased to 101.3 billion yuan in the first half of 2022.

Data from the market research firm IDC showed that as component supply issues were resolved, Huawei’s smartphone shipments in the Chinese market surged by 76.1% in the second quarter of 2023, ranking alongside Xiaomi as the fifth-largest in the domestic market, with a market share of around 13%.

Many analysts predict that Huawei might reintroduce domestically produced 5G chips to the market in the second half of the year, potentially gaining a higher market share.

The company’s highly watched Smart Car Solution business unit (Auto BU) achieved revenue of 1 billion yuan in the first half of the year, which is not a significant increase compared to the full-year revenue of 2.1 billion yuan in the previous year. Last Friday, there were media reports that Huawei intends to promote the independent operation of theAuto BU and is in discussions with the Chongqing State-owned Assets Supervision and Administration Commission (Chongqing SASAC) regarding cooperation, with a scenario similar to Honor’s independent operation. In response, the company publicly stated that the rumors circulating on the internet do not align with the facts, and it has not been in discussions with the Chongqing SASAC regarding the car BU.