US Sanctions Continue Since 2019
WSJ "Efforts to Diversify Business... Sign of Stabilization"
[Asia Economy Reporter Cha Min-young] Chinese telecommunications equipment company Huawei, whose position has been narrowed by U.S. trade sanctions, recorded slightly decreased cumulative sales for the first to third quarters of this year compared to the previous year. However, its third-quarter performance improved compared to the first and second quarters, leading some to evaluate that efforts to diversify its business have yielded some results.
According to the Wall Street Journal (WSJ) and South China Morning Post on the 27th (local time), Huawei recorded sales of approximately 445.8 billion yuan (61.8 billion dollars) for the first to third quarters, down about 2% compared to the same period last year. The operating profit margin during this period was 6.1%, amounting to about 27 billion yuan (3.7 billion dollars). Although Huawei did not disclose this directly, it is estimated that in the third quarter of this year, sales increased by 6.5% year-on-year to 144.2 billion yuan (20 billion dollars). Quarterly sales have increased for two consecutive quarters.
Eric Xu, Huawei's rotating chairman, stated in a press release, "The decline in the device business has slowed, and the ICT infrastructure business has maintained steady growth," adding, "We will continue to recruit top talent and invest in research and development to enhance product competitiveness."
Foreign media have focused on the fact that Huawei's high-profit smartphone business has struggled due to difficulties in securing advanced chipsets amid U.S. sanctions against China that have continued since 2019. According to market research firm Omdia, Huawei briefly surpassed Apple and Samsung in global smartphone sales in 2020, but its shipments plummeted by 82% in 2021. In the third quarter of 2022, shipments were 8.6 million units, placing it within the top 10. This is a poor performance compared to its overall third place ranking in 2020.
Cornered Huawei is striving to diversify its revenue sources. It has sold some business units, including the mid-to-low-end smartphone brand 'Honor.' The South China Morning Post cited an internal memo leaked in August, noting, "Due to the impact of U.S. sanctions, Huawei founder Ren Zhengfei warned employees about the global economy and urged them to focus on profitability for survival."
Some have also paid attention to the consecutive sales growth for two quarters. The WSJ evaluated, "Huawei recorded higher sales for two consecutive quarters," calling it "a sign that the business has stabilized after years of punitive U.S. sanctions."
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