Huawei sees sharp decline in growth due to US Sanctions

Remigio Civitarese
Ottobre 23, 2020

China's Huawei Technologies Co Ltd reported a 9.9% rise in nine-month revenue on Friday, as USA export restrictions and the global COVID-19 pandemic weakened sales growth in products such as smartphones and telecoms equipment.

During January to September this year, Huawei generated 671.3bn Chinese Yuan ($100bn; £77bn) in revenue. Furthermore, Huawei's net profit margins were 8 percent for the first nine months, which was also lower than the 8.7 percent from back in 2019. "The company continues to do its best to find solutions, survive and forge forward, and fulfill its obligations to customers and suppliers".

The company wrote that "as the world grapples with COVID-19, Huawei's global supply chain is being put under pressure and its production and operations face significant challenges".

On Thursday, Huawei unveiled its Mate 40 smartphones, claiming they feature a more "sophisticated" processor than Apple's forthcoming iPhones.

However, the Chinese company is also facing the greatest uncertainty in its history as nearly all global chip suppliers, including TSMC, its production partner for the Kirin 9000 5G SOC, have been forced to cut ties to comply with the new USA export control regulations. Analysts expect its stockpile of the chips to run out next year.

Huawei is a privately-held company and its announcement did not break down its results in terms of smartphone or telecoms equipment sales, or other detail. This is despite Huawei's rotating Chairman Guo Ping saying the company has secured sufficient inventories for its carrier business, and is still searching for alternative smartphone component supplies.

Huawei also faces pressure overseas in its telecommunications infrastructure business. Demand for rolling out 5G networks in China, however, could provide strong support for the company.

The global outlook for Huawei's carrier business, however, is very murky for 2021 and it could see its market position erode to a certain degree, Teral added, as most major European countries have made a decision to avoid using Huawei in their 5G mobile networks.

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