- Several businesses from China have been affected due to China-US issues.
- Huawei among those has been experiencing a steep fall in revenue.
- Huawei’s founder’s daughter’s arrest adds up to the decline even though the release has been granted to her recently.
Reasons Why Huawei Profits Fall More than Expected
Profit decline hit Huawei by 70% than last year amid sanctions and pandemic challenges but on the contrary technology giant’s enterprises sales have risen as they have gotten into digital industries just to help with U.S. sanctions.
Eric Xu the rotating chairman of Huawei while talking at a news conference expressed his views saying that even though the pressure is noticeable and considerable there are hopes to grow the resilient business portfolio with the help of customers’ and partners’ trust and large-scale investments in R&D. This talks about company’s hopeful future predictions.
The net profit of the company this year was 35.6 billion which is 68.7% lesser since 2021 and as per the company’s statement annual revenue had also reached 642.3 billion yuan which is more than the previous year by 0.9%.
Further, there was also a decline in consumer business which is based on selling smartphones and Huawei reported a higher than 113.7 billion yuan in profit in 2021 only because of budget smartphones like Honor.
“The year 2022 is a year where Huawei pulled itself out of a crisis mode. U.S. restrictions are now our new normal and we’re back to business as usual,” said Sabrina Meng, Huawei’s chief financial officer, who will become the firm’s rotating chairwoman from April 1.
She is Huawei’s founder’s daughter who was arrested on U.S. charges of lying to Hong Kong banks about dealings with Iran violation of trade sanctions and was also detained for almost three years.
Because of her acceptance of responsibility, she has now been released by U.S. Justice Department. She was released after the US Justice departments understanding that will now dismiss the charges.
The technological and security issues between China and US are reflected in the tech brands’ revenue as the officials think that the company is a threat to its security and has been spying as per American officials which have been denied by the company.
The Chinese firms have been cut off from access to software like Google to smartphones and US firms have also been banned to continue business with Huawei.
Several companies have shifted their focus and are focusing more on healthcare, manufacturing, transportation, and mining along with selling network gear and services just like Shenzhen.
Huawei’s consumer business revenue which is involved in selling smartphones, tablets, and other devices has been falling 11.9%, and yet the enterprise’s business revenue has risen by 30% from the earlier year.
