Chinese telecommunications company Huawei reported a net profit of CNY35.6 billion for 2022, a slump of 69% year-on-year, while revenue inched upwards by 0.9% to CNY642.3 billion, a result company executives said is “in line with forecasts despite substantial pressures.” The 2022 revenue represents a tiny increase from 2021, when it hit CNY636.8 billion, but marks a big turnaround from the nearly 30% year-on-year drop in 2021 due to U.S. sanctions. Profits suffered a big decline, which was mainly due to rising commodities costs and U.S. sanctions, as well as a strong boost in research input, Chief Financial Officer Meng Wanzhou said at the company's annual report press conference held in Shenzhen. Huawei's annual expenditure for research and development (R&D) reached CNY161.5 billion in 2022, representing 25.1% of the company's annual revenue and bringing its total R&D expenditure over the past 10 years to more than CNY977.3 billion. “Despite substantial pressure in 2022, our overall business results were in line with forecasts,” Meng said.
In 2022, revenue from Huawei's carrier, enterprise, and consumer businesses was CNY284 billion, CNY133.2 billion, and CNY214.5 billion, respectively. Profits are falling, and the profit margins are not very high, which indicates that the firm, although making some progress, is still in a difficult period with many problems that need to be resolved, Fu Liang, a veteran industry analyst, told the Global Times. Fu pointed out that the sharp slump was also due to the high basis of profits from last year, when they were boosted by the sale of its Honor smartphone branch. Observers also stated that increasing investment in R&D would enable the firm to quickly emerge from the shadow of U.S. sanctions, thus helping it to find alternatives for critical components that it previously relied on the U.S. for. Huawei, which has been the target of a U.S. crackdown for roughly four years, said it has adopted a business-as-usual approach since U.S. sanctions have become a “new normal” for the company. Looking ahead to 2023, “sustainable survival and development” remains a top priority, rotating Chairman Eric Xu said.
Following the company's latest progress in countering the U.S. ban, Xu disclosed at the conference that Huawei has made breakthroughs in electronic design automation (EDA) tools for chips produced with 14-nanometer technology and above, which indicates all domestic semiconductor firms can use the EDA tool for designing chips. “Under such severe pressure, there will always be a breakthrough, and the higher the pressure is, the sooner the industry will make a breakthrough," Fu said. He noted that under a national-level strategy, the domestic semiconductor sector is working vigorously to develop and “resolve bottlenecks one by one.” “We also believe that the Chinese technology industry as a whole will not sit idly by during the U.S. crackdown on China's semiconductor sector, and we will support all efforts for such 'self-saving' moves,” Xu said, as reported by the Global Times.
