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Huawei sales drop as company grapples with US sanctions

On Thursday August 11, Chinese telecommunications equipment and smartphone maker Huawei’s sales fell 14% from January to March from a year earlier, as it pumped money into research and development. development while grappling with US sanctions.

Affected sales of Huawei

According to the Wall Street Journal, Huawei Technologies said its revenue was 131 billion yuan or $19.8 billion in the first three months of 2022, down from 152.2 billion yuan or $22 billion. in 2021.

Huawei’s net profit margin for the quarter was 4.3%, compared to 11.1% in the same quarter of 2021. The company’s rotating chairman, Ken Hu, said the figures were in line with forecasts.

Hu said his consumer business has been hit hard and his ICT infrastructure business has seen steady growth.

In 2019, the Shenzhen-based company was placed on a trade blacklist that barred US companies from doing business with the major supplier of networking equipment and smartphones.

The sanctions hit the company hard because it relied on Google services and other key technologies for its handset.

Also Read: US Files Charges Against Huawei for Alleging Chinese Telecom Giant Stealed Trade Secrets and Violated Iran Sanctions

The decline of Huawei

Once the world’s largest smartphone maker, Huawei dropped out of the top five brands in 2020 due to sanctions. In 2021, the company also fell out of China’s top five as it battled chip shortages.

The company has since invested heavily in research and development, spending 142.7 billion yuan or $21.6 billion to develop new technologies as it seeks to carve out new business areas less vulnerable to sanctions. .

Huawei’s research and development spending accounts for 22.4% of its sales, outpacing rivals such as Samsung and Apple, according to the Associated Press.

At the annual analyst summit in early August, Hu said Huawei’s commitment to developing new business areas like cloud computing and 5G is ongoing.

Since being added to the US blacklist, Huawei has also developed its own mobile service platform to circumvent its lack of Google services.

The platform allows developers to launch apps for multiple Huawei devices, although apps like YouTube can only be opened via shortcuts that take users to the mobile site.

Huawei also sold off its Honor smartphone brand at low prices in 2020, hoping to boost sales by insulating it from Huawei sanctions.

Huawei’s success in Indonesia

Despite struggling with the sanctions the United States imposed on it, Huawei found success elsewhere. Indonesia has adopted the Chinese company and its products.

Huawei provides the technology and training to much of Indonesia’s cybersecurity workforce and government officials, according to Foreign Policy.

Chinese technological success in the country offers sobering lessons for the United States, its allies and partners, not only in Indonesia, with a population of more than 270 million, but also in other Indo-Pacific countries.

Unless U.S. policymakers take a few pages from Huawei’s playbook, the Chinese tech giant won’t face any serious competition as it maneuvers to train large swaths of the new digital workforce.

After all, the United States and its allies and partners have worked to protect themselves from the vulnerabilities of reliance on Chinese technology.

Related Article: Huawei Founder Urges Employees to Fight Until “Nobody Intimidates Them”

This article belongs to Tech Times

Written by Sophie Webster

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