Huawei Defies US Sanctions with 10% Revenue Surge

Quincy Jon, Tech Times 29 March 2024, 10:03 am

Huawei Technologies reported a substantial earnings increase last year despite US penalties. The major Chinese tech company credits its strong performance to its cloud and digital divisions.

Huawei's net profit rose to 87 billion yuan ($12 billion) in its latest financial report from Shenzhen. Strong sales and product advancements drove this significant growth. Huawei also increased sales by nearly 10% to 704.2 billion yuan ($97.4 billion), according to AP News.

Huawei's rotating chairman, Ken Hu, said the company's financial results met expectations and overcame many hurdles and "managed to grow." Huawei reported gains from the sale of several businesses in addition to its core activities.

Huawei's profit growth coincides with escalating US-China technological and security concerns, with US companies facing restrictions in doing business with Huawei owing to harsh sanctions from the US government. Consequently, Huawei has faced restrictions on computer chips, software, and Google services for its devices.

Recalibrating Business Strategy

To address the challenges, Huawei has refocused its business on cloud computing and digital transformation solutions for diverse sectors to address these problems. In 2023, its cloud computing division earned 55.3 billion yuan ($7.7 billion), up 22%. Digital power sales rose 3.5%, but automotive services income quadrupled.

Huawei smartphone sales rose 17.3% in 2023 despite U.S. restrictions for Huawei's consumer division. Chinese semiconductor manufacturer Semiconductor Manufacturing International Corporation's revolutionary CPUs drove the company's high-end Mate 60 smartphone series.

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(Photo : PAU BARRENA/AFP via Getty Images)

People visit the stand of Huawei Chinese corporation during the Mobile World Congress (MWC), the telecom industry's biggest annual gathering, in Barcelona on February 26, 2024.

TechTimes previously reported that Huawei's smartphones doing well in China, while Apple witnessed a 24% dip in iPhone sales in the first six weeks of 2024. Huawei, its primary premium smartphone competitor, enjoyed a 64% increase. The Chinese tech firm's market dominance is changing China's smartphone sector.

Moreover, Huawei seeks to develop new goods and services with global ecosystem partners to enhance its high-end market position. However, recent charges and investigations have cast doubt on the company's 5G chip production.

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Huawei strives its research and development despite regulatory constraints and geopolitical pressures. The firm spent 164.7 billion yuan ($22.8 billion) on R&D in 2023, roughly a quarter of its revenue. Huawei is one of the IT industry's top innovators, with over half of its personnel dedicated to R&D.

Huawei Controversy

It is important to note that Chinese tech firms Huawei Technologies Co. and SMIC reportedly used US technology to create a cutting-edge microprocessor in China last year.

Shanghai-based SMIC used Applied Materials Inc. and Lam Research Corp. equipment to make a 7-nanometer chip for Huawei in 2023. As China relies on foreign components and equipment for semiconductors despite its technical self-sufficiency initiatives, this chip fabrication uses US technology, highlighting China's difficulties in replacing foreign inputs.

This chip, an indigenous semiconductor fabrication feat, propelled Huawei's Mate 60 Pro and boosted Chinese smartphone sales. The chip may not match global corporations' components, but it shows development beyond what the US expected in slowing China's semiconductor technology.

In addition to ASML Holding NV technology, Lam and Applied Materials equipment were used to make the chip. This use of foreign technology shows China's efforts to meet chip production requirements.

The US has blacklisted Huawei and SMIC for potential military links, limiting their access to US technology. After the Mate 60 Pro's release, the US investigated Huawei's CPU for national security reasons as the US Department of Commerce officials doubt SMIC can mass-produce 7nm semiconductors without ASML's sophisticated lithography tools.