Huawei Revenue Tanks 30% In 2021 As Trump Era Sanctions Bite But Chinese Telecom Giant Insists It Will Weather The Storm

by Bhaswati Guha Majumder - Jan 1, 2022 08:08 AM +05:30 IST
Huawei Revenue Tanks 30% In 2021 As Trump Era Sanctions Bite But Chinese Telecom Giant Insists It Will Weather The Storm
Huawei (David Becker/Getty Images)
Snapshot
  • Huawei, a Chinese telecom behemoth, reported a massive decline in revenue by almost 30% in 2021, compared with the year before, as American sanctions hit the company hard.

The controversial Chinese tech giant Huawei Technologies Co Ltd. anticipated sales to drop about 30 per cent in 2021 and expects more hurdles in coming years but at the same time, it sounded a cautiously optimistic note on its future.

According to reports, chairman Guo Ping stated in a New Year letter to staff on 31 December that revenue for the year is likely to be 634 billion yuan ($99.48 billion)—which represents a fall of 28.9 per cent from last year’s revenues of 891.7billion yuan.

Guo said: “2022 will come with its fair share of challenges, but we will keep working closely with our global partners to overcome the difficulties we face, improve business performance and strengthen our foundations.”

Additionally, he wrote: "An unpredictable business environment, the politicisation of technology, and a growing deglobalisation movement all present serious challenges."

The Donald Trump administration in the United States slapped a trade restriction on Huawei in 2019, claiming national security concerns, prohibiting the company from utilising Alphabet Inc's Android for new handsets, as well as other vital US-origin technology. The last 12 months marked Huawei's first calendar year since the United States enacted a comprehensive set of export controls.

The restrictions prohibit any company in the globe from using American technology or components to supply Huawei or companies that use or produce its products without a licence to export. The sanctions have mostly impacted the group's consumer sector since Huawei is no longer able to get critical chips for its devices.

With Chinese firm denied any access to chips made with US equipment, its smartphone business, which in 2020 generated more than half of revenues, has dramatically declined.

While the company as a response to the extreme measures tried to boost other fields of the business such as cloud services and electric vehicle component manufacturing, it spun off Honor, a smartphone brand, and has quickly lost worldwide market share to rivals like as Apple and domestic brands such as Oppo and Xiaomi.

According to Reuters, Guo said, "We need to stick to our strategy and respond rationally to external forces that are beyond our control," in the letter, which also noted that the Chinese telecom giant will continue to focus on information and communications technology or ICT infrastructure, as well as smart products.

He also stated that “our carrier business remained stable, our enterprise business experienced solid growth and our device business expanded swiftly into new business domains”—that include smart speakers, wearables, laptops and smart car equipment, reported Financial Times.

Huawei's operating system, Euler, will be promoted as the foundation for a software ecosystem for digital infrastructure such as servers, according to the company. This is similar to Huawei's efforts to enhance Harmony, the company's more well-known OS for devices like smartphones. Despite the pressure from the United States, the dual effort demonstrates the company's commitment to remaining a tech leader.

Additionally, in September the Shenzhen-headquartered company unveiled its 6G plans and said that it aims to launch 6G products around 2030.

Guo wrote in the letter: “Cutting costs won’t pave the way to sustainable survival. Only through strategic investment we can grow stronger and build a future for ourselves.”

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