China’s Huawei Technologies said on Friday that its net profit more than doubled in 2023, with revenue rising across all of its businesses for the year.
Huawei’s net profit of 87 billion yuan ($12 billion) was the highest in five years, excluding 2021 when it recorded an undisclosed amount of profit from the spin-off of its low-cost Honor smartphone line.
The figures are a strong sign that the company is able to withstand constant pressure from Washington, including strict export controls.
Huawei’s resurgence, particularly in the domestic smartphone market, has put pressure on its competitors, especially Apple.
Huawei, once the world’s second-largest smartphone maker, said revenue from its sanctions-hit consumer electronics business rose 17.3 per cent year-on-year to 251.5 billion yuan last year, and that momentum continued in the first quarter of this year.
Huawei also said its HarmonyOS operating system is now installed on more than 800 million devices across all platforms, up from about 330 million devices in the same period last year. The company began focusing on developing its response to Google’s Android operating system after Washington cut off its access to American technology. By comparison, there are about 3.9 billion active smartphones running the Android operating system, the world’s largest operating system, according to BusinessofApps.
Chip competition
Huawei’s strong annual performance followed the launch of its flagship Mate 60 Pro series phone last year. The company was able to use advanced 7-nanometre chip technology in the high-end model despite US export controls restricting its access to the world’s top chipmakers.
As Huawei’s success is seen as a victory in China’s technology war against the US, Washington is considering further tightening export controls. But Huawei still relies on US chipmaker Qualcomm to supply the 4G mobile chips for most of its smartphones.
Runar Bjorhovde, an analyst at Canalys, said Huawei had made a strong comeback in China in the second half of 2023, rising to the top five. Speaking to Nikkei Asia, the analyst said: “It carried a strong momentum into the early months of 2024. But this resurgence is putting pressure on other vendors in China’s already hyper-competitive environment.”
Ninety-four per cent of Huawei’s smartphone shipments remained in China in 2023.
“Apple is feeling the pressure of Huawei’s resurgence the most. Recently, Apple has responded with initiatives to consolidate its position in the market by increasing its investment in China, including significant spending on joint marketing campaigns, a new Apple Store and a visit by CEO Tim Cook.”
‘We managed to grow despite challenges’
Huawei’s overall performance in 2023 was “in line” with forecasts, Huawei’s rotating chairman Ken Hu said on Friday, adding that the company had managed to grow despite “successive challenges”.
The company’s revenue rose 9.6 per cent to 704.2 billion yuan in fiscal 2023 from 642.33 billion yuan in fiscal 2022. The company’s research and development expenditure reached another historic high of 164.7 billion yuan, equivalent to about 23.4% of its total revenue. Over the past decade, the company has spent a total of 1.11 trillion yuan on R&D.
The company’s cloud business has seen massive growth, driven by explosive demand for generative AI technologies. By 2023, the division’s revenue will have increased by 21.9 per cent year-on-year to 55.3 billion yuan.
China’s voice recognition AI champion iFlytek and the European Centre for Medium-Range Weather Forecasting are among the users of Huawei’s Pangu training model.
Huawei’s ICT infrastructure business, which includes the carrier and enterprise businesses, remained the company’s largest revenue pillar, with revenue up 2.3 per cent to 362 billion yuan.
Huawei, once again the world’s largest telecom equipment vendor, began deploying 5.5G wireless network technologies at home and abroad, including in Turkey, Brazil and the Middle East. According to Huawei, some telecom operators in Finland and Germany have also completed verification of the technology, a crucial step before deployment.
Revenue from the company’s nascent automotive electronics business more than doubled to 4.7 billion yuan last year, compared to 2022. It has partnered with many Chinese automakers, including Baic Group and Seres, but currently only serves the domestic market.
