HUAWEI in sharp decline as company objective shifts to survival

HUAWEI does not appear to have recovered from the U.S. trade ban as the company reported a sharp drop in its earnings in its H1 results 2021 today. HUAWEI’s revenue declined to CNY 320.4 billion (~ $ 49.5 billion) in the most recent quarter, a decrease of nearly 30% year over year.

Despite the decline in sales, HUAWEI Chairman Eric Xu claims that the company has set “strategic goals for the next five years”. He says the company will do anything to “survive”.

“We are confident that our carrier and enterprise business will continue to grow steadily.”

On the upside, however, the company saw earnings grow 0.6% from 9.2% in the first half of 2020 to 9.8% in 2021. Corporate business, which contributed just a small amount of over CNY 42 billion, is booming, and is the fastest growing of the remaining three, according to HUAWEI. In addition, the company has no plans to downsize or close its business overseas.

One of the main reasons for this drop in sales is the delay in 5G deployment in China. China Mobile, one of the largest wireless operators in China, has postponed its tender for 700 Mhz 5G to mid-July. HUAWEI expected to mint money from the sale of this tender as the company had secured 60% of the contract.

The mobile division is also not doing well. The company ranked behind OPPO, Vivo and even Motorola in terms of smartphone shipments as Xiaomi closed the gap with Samsung.

With the U.S. government showing no sign of easing HUAWEI’s existing trade restrictions – and making trading 5G devices even more difficult earlier this month – it remains to be seen how the company sets out its business plan for international markets.

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