Chinese tech giant Huawei reports tepid consumer revenue growth for the first half of 2023

Earnings

Huawei’s production campus is pictured here on April 25, 2019, in Dongguan, near Shenzhen, China.
Kevin Frayer | Getty Images News | Getty Images

BEIJING — Chinese tech giant Huawei on Friday reported 2.2% year-on-year growth in its consumer business revenue for the first half of the year.

The modest growth comes alongside China’s slower-than-expected economic rebound this year, and U.S. sanctions on the company that began in 2019. Those business restrictions have since weighed on results.

At 103.5 billion yuan ($14.27 billion) in first six months of 2023, Huawei’s consumer revenue was less than half what the segment had generated during the same period in 2019 and 2020.

The 2.2% pace of growth was also slower than the company’s overall revenue increase of 3.1% to 310.9 billion yuan in the first half of the year.

Huawei’s ICT infrastructure business, which includes carrier and enterprise services revenue, contributed the most to overall revenue with 167.2 billion yuan for the first half of the year.

Cloud services brought in revenue of 24.1 billion yuan, while intelligent automotive solutions — whose products include tech for new energy vehicles — saw revenue of 1 billion yuan in the first six months of 2023.

Huawei has its own electric car brand, Aito, which claims to have produced 100,000 vehicles in 15 months through a partnership. Those sales are generally counted as part of the consumer business.

The consumer segment is the only unit with year-on-year comparable figures since Huawei didn’t start reporting revenue breakdown by cloud and other industries until late last year.

Huawei reported a significant increase in its net profit margin of 15% in the first half of the year, up from 5% in the year-ago period. The company attributed the improvement to better management systems and gains from the sale of certain businesses, which it did not specify.

The company also pressed ahead in its efforts to monetize artificial intelligence by launching in July an AI model for improving safety and efficiency in mining operations.

Second-quarter overall revenue grew by 4.8% year-on-year to 178.8 billion yuan — the fastest pace since only the fourth quarter of 2022, according to CNBC calculations.

Looking for smartphone growth

Overall revenue growth in the first half of 2023 comes off a low base. Huawei previously said its revenue barely grew in 2022 after reporting in 2021 its first annual revenue decline on record.

In 2019, the U.S. under President Donald Trump put Huawei on a blacklist that restricts the ability of American companies to sell to the Chinese telecommunications giant. That includes licensed access to the latest versions of Google’s Android operating system.

Huawei has instead released its own system, called Harmony OS. Earlier this month, the company announced the latest version of that operating system — and claims it was downloaded over one million times in three days.

This year, Huawei expects the launch of its flagship consumer products to return to a “normal” schedule, amid a slump in the smartphone market. The company did not share the extent to which there had been delays. In 2019, CNBC reported Huawei pushed back the release of a foldable phone.

In March, Huawei released its P60 smartphone, Mate X3 foldable and Watch Ultimate wearable, whose sales contributed to first-half growth in consumer business revenue, the company said.

“The industry and global markets will remain rife with uncertainty for the rest of 2023,” a Huawei spokesperson said in a statement.

“Nevertheless, we are continuously building out our mechanisms for global business continuity management and our agile operations management system,” the spokesperson said.

“We are confident that we can meet our annual business targets and continue creating value for customers and society at large.”

— CNBC’s Arjun Kharpal contributed to this report.

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