HUAWEI today released its annual financial report for 2020, a year marked by pandemic business disruption and US government sanctions that have drastically impacted the company’s business, particularly smartphones. However, the company still does reported net sales of CNY 891.4 billion (~ $ 136.04 billion), an increase of 3.8 percent over the previous year. Net income rose 3.2 percent to hit CNY 64.6 billion (~ $ 9.86 billion).
HUAWEI’s net income rose 3.2 percent to hit CNY 64.6 billion (~ $ 9.86 billion).
The Chinese market alone accounted for 65.6% of net sales and contributed CNY 584.9 billion (~ $ 89.26 billion) to the total. However, sales from other markets fell sharply. Sales in America fell by 24.5 percent, while EMEA and the Asia-Pacific region recorded negative growth of 12.2 percent and 8.7 percent, respectively.
From the perspective of the division, the carrier business remained relatively stable with sales growth of only 0.2 percent, the enterprise business by 23 percent and the consumer business by only 3.3 percent. Speaking of consumer business, The decline in the cellular business was negated by the other product categories that are part of HUAWEI’s 1 + 8 + N strategy.
Hu mentioned this during the press conference Parts ‘8’ and ‘N’ of the 1 + 8 + N strategy compensated for the decline in the smartphone business. For the unconscious, here is the breakdown: 1 (phones), 8 (AR / VR, tablet, PC, TV, smartwatch, speakers, vehicles and audio portable) and N (services like video and mapping and a wide range of other hardware like projector and printer).
HUAWEI’s smartphone strategy continues to evolve
“The delivery restrictions for the smartphone business have had a major impact, and we have not been able to get a clear picture of what is on offer for smartphones. It is currently very difficult for us to make a forecast for our smartphone business, ”Hu answered a question about HUAWEI’s future strategy. However, HUAWEI’s managing director made it clear that the company will launch more flagship phones that are currently part of its roadmap.
HUAWEI Rotating Chairman Ken Hu
Hu’s statement also suppresses rumors that HUAWEI was planning to get out of the flagship mobile game and sell its Mate and P-series business to give it a chance to survive. The HUAWEI manager also pointed out that there is great interest in its latest foldable phone – the Mate X2 – and the company intends to keep this series of smartphone innovations for the foreseeable future. However, the HUAWEI executive also pointed to the global shortage of semiconductor industries, and that much depends on how the situation unfolds in the coming months.
“As a result of the unfair sanctions imposed on us by the US, our wireless business has seen a decline in sales,” Hu said during the presentation. The company mentioned this in its annual report The number of HUAWEI smartphone users has exceeded 730 million worldwide. The company also found that the growth of its HMS ecosystem has exceeded its expectations by 2020.
The road ahead is not easy for HUAWEI
“For the industry it was a losing situation. It [is] very unfair and has done us great harm, ”quoted MobileWorldLive Hu on the effects of the US sanctions affecting the sale of phones and telecommunications equipment. An executive told TheWashingtonPost that 2020 will be “a really tough year for HUAWEI” under the terms of anonymity. According to a Bloomberg report Smartphone shipments fell 42% in the final quarter of 2020and lag behind international names (Apple and Samsung) as well as domestic rivals (OPPO and Xiaomi).
The main reason HUAWEI lost market share in smartphones after the US sanctions was the lack of access to key Google services like Maps, Gmail and Play Store. While the software shortcoming mentioned above doesn’t mean much to the Chinese market, users in other regions where these services are at the heart of the Android experience will find it extremely limiting. Additionally, the sanctions have also blocked HUAWEI’s supply chain, meaning sourcing core components for smartphones has also become difficult for the company.
A major reason HUAWEI lost market share in China was the inability to diversify its 5G smartphone portfolio across different price ranges in 2020, making it even more difficult to trade in 5G devices earlier this month – it remains to be seen how the company plans its business plan for the international markets.
I’ve been writing about consumer technology for over three years, having worked with names like NDTV and Beebom in the past. Leaving the latest news aside, I’ve checked out my fair share of devices that range from smartphones and laptops to smart home devices. I’ve also interviewed tech managers and acted as a presenter on YouTube videos talking about the latest and greatest gadgets.