The plummeting sales of Huawei, a Chinese technology group that has been hit by harsh US sanctions, is starting to subside as the company’s expansion of its domestic cloud business offsets plummeting smartphone sales.
Huawei on Friday reported a 6% year-on-year drop in total revenue to 301.6 billion yuan ($44.7 billion) in the first half of the year, while revenue in the enterprise segment, which includes cloud computing, increased 28%. 54 RMB. 7 billion during the period.
The decline marks an improvement from 2021, when Huawei’s revenue fell 29% after Washington attacked the group with export controls that denied access to critical technology and components.
The measure primarily affected the group’s smartphone business by restricting access to the semiconductors needed to power mobile phones. Huawei has been forced to sell Honor, one of the company’s top smartphone brands, in 2020.
Smartphone sales, the main driver of the Group’s consumer business, were down 25% in the first half of the year as a result of weak demand for consumer electronics.
“Our device business has been hit hard, [enterprise and carrier businesses] Huawei Chairman Ken Hu said in a statement:
Huawei said its net profit margin in the first half of 2022 was 5%, down from 9.8% in the same period last year.
Huawei’s cloud computing division beat out competitors such as Jack Ma’s e-commerce group Alibaba to win cloud deals.
Alibaba and rival Tencent derive about half of their cloud revenue from serving Chinese internet companies.
Canalys cloud expert Zhang Yi said:
“Huawei has a very good relationship with the government, which has helped us win business,” said Zhang.
Huawei is also one of the top vendors providing private cloud services. The more highly customized segment of this market is often favored by state-owned enterprises and municipalities.
Huawei’s political endorsement in China has helped bolster the company, but the group’s ties to Beijing have caused problems abroad.
In May, Canada became the latest country to ban Huawei and Chinese peer ZTE from offering 5G services in the country. The Canadian government has also instructed the carrier to remove Huawei equipment from his existing 4G network.