Huawei's 2022 Sales Surge Despite Drop in Profit Due to US Sanctions

Trisha Kae Andrada, Tech Times 31 March 2023, 09:03 am

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Huawei reported a roughly 70% drop in earnings last year amid sanctions and pandemic concerns. Still, its enterprise sales climbed as the Chinese technology giant moved to pivot into digital sectors and decrease its vulnerability to US sanctions.

2022 Financial Report

Eric Xu, Huawei's departing rotating chairman, remarked at a media briefing, "While it's true that we have considerable pressures ahead of us, we still see opportunities to grow a resilient business portfolio, a unique competitive edge, the trust of our customers and partners and have the courage to invest heavily in R&D."

Up by 0.9% over the previous year, Huawei's sales in 2022 were reportedly 642.3 billion yuan ($93.5 billion).

According to ABC News, Huawei's net profit dropped 68.7% to 35.6 billion yuan ($5.2 billion) from 113.7 billion yuan ($16.6 billion) in 2021 because of the pandemic, US sanctions, rising commodity costs and R&D investment, and a downturn in its consumer sector, which sells smartphones.

Sabrina Meng, Huawei's chief finance officer (CFO), stated, "The year 2022 is a year where Huawei pulled ourselves out of a crisis mode. US restrictions are now our new normal, and we're back to business as usual."

Starting Apr. 1, Meng will take on the job of rotating chairperson, allowing her to manage the company's operations for six months.

After her arrest on US allegations of lying to Hong Kong banks about contacts with Iran in violation of trade restrictions, Meng was held in Canada for over three years until the Justice Department dropped the charges in return for her taking responsibility for Huawei's misrepresentation.

Amid Rising US-China Tensions

Despite its denials, the Chinese electronics giant has found itself in the middle of escalating tensions between China and the US over national security and cybersecurity issues.

Huawei is barred from selling its telecommunications equipment to US consumers and from using processors and software like Google services for its handsets.

In 2022, the Shenzhen-based telecommunications firm focused on expanding its corporate business by providing network equipment and services to sectors including healthcare, manufacturing, transportation, and mining.

Huawei's enterprise business sales climbed 30% to 133.2 billion yuan ($19.4 billion) in 2022, up from 2.1% in 2021.

Huawei was the world's leading smartphone producer in 2020, but after losing its Android license and Google services, its consumer business revenue fell 11.9%.

Also Read: Huawei's Mate X3 Foldable is Better than Samsung, But with One Major Exception

R&D Investment

In 2022, Huawei invested a record 161.5 billion yuan ($23.5 billion), or 25% of its entire sales, in R&D. This makes the firm one of the world's largest spenders in this area.

As per ABC News, Meng stated that the company's R&D efforts had allowed it to replace components it blocked access to when Huawei was struck by US sanctions and that the R&D department accounts for just over half of Huawei's 207,000 workers.

Huawei's rotating chairman Xu said Friday that the company has made advancements in electrical design automation tools for semiconductors at 14 nanometers and upwards alongside its partners. This development coincides with rising tensions between China and the US and a government drive for technological independence in China.