Huawei: Growth slows amid geopolitical tensions, but smart cities on the horizon
Huawei took home $137.7bn in revenue last year, an uptick of just 3.8 per cent year on year, as it saw a lift to its enterprise business amidst geopolitical tensions.
The Chinese telecoms giant enjoyed a 23 per cent boost to its enterprise business which earned $15.4bn, as it has channelled its focus away from the Americas.
The region, despite earning 24.5% more than 2019, was the least profitable region, earning just $6.1bn compared to $27.7 in Europe, the Middle East and Africa (EMEA) and $89.7bn in China.
Sanctions on Huawei by the US in 2019 and 2020 have slowed the company’s growth but have not halted movement completely as the company’s net profit reached $9.9bn, up 3.2 per cent year-on-year.
Former US President Donald Trump rolled out restrictions on American companies doing business with Huawei, amid fears its technology could be used for spying.
The restrictions led to a chip shortage that hit the telecoms giant’s phone production and curbed profits.
In a conference this morning, vice president Victor Zhang confirmed it was a “challenging” year for the company, but that it was looking to diversify its supply chains.
“Regarding the chip supply, I can see that Huawei has enough inventory for supporting our global customer applications, especially for the 5G, the software and also the smart phone business.”
“We are working on not having to rely on a single supplier, or a single country sort of supply chain. That’s our key priority.”
Its consumer business bagged the most revenue of $74.1bn, with a 3.3 per cent rise from last year.
Huawei’s carrier business, supplying 1,500 networks in over 170 regions, saw a minor rise of 0.2 per cent but reached $46.4bn in revenue.
UK’s 5G
Last year, the UK banned Huawei equipment from being used in its 5G mobile network.
The “political decision made by the UK government,” will have a “huge economic impact” on the UK’s digital infrastructure, Zhang said.
“The consequence of this decision definitely will impact the UK’s digital transformation. Especially as you can see the speed up of 5G deployment around the world, especially in Canada and in Europe,” Zhang added.
“The UK will definitely see a slower deployment of 5G because of this decision.”
The move sparked warnings of retaliation from China, however, Zhang urged that although Huawei was “forced into the geopolitical conflict” it has no “political position”.
Infrastructure
With the cold shoulder from both the UK and the US, the telecoms giant has leaned into its infrastructure abilities over the past year.
The company’s enterprise business has been pushing for smart cities in over 40 regions between September and December 2020, as it placed ‘smart solutions’ in over 700 cities.
Smart cities aim to have predictive technologies like Artificial Intelligence (AI) to enable a better response to emergencies, smooth traffic flow and become more energy efficient.
Huawei is currently working alongside suppliers like BT and Vodafone on smart city infrastructure, providing the connectivity hardware.
During the pandemic, the company provided AI-assisted diagnostic solutions through HUAWEI CLOUD, which helped hospitals lessen the weight on their medical infrastructure.
Huawei also worked with partners to launch cloud-based online learning platforms for around 50m primary and secondary school students, as schools shut around the world.
The company has invested 10 per cent of its sales revenue into research and innovation, accounting for around 15.9 per cent of the company’s total revenue at $21.8bn.