Business / Corporate

Huawei posts 23% sales growth as U.S. sanctions set to bite

Bloomberg

Huawei Technologies Co. reported a 23 percent rise in revenue to 401.3 billion yuan (¥6.3 trillion) in the first half as the Chinese telecommunications giant withstood U.S. efforts to curb its business.

The firm’s profit margin was 8.7 percent in the six months ended June, the Shenzhen-based company said in a statement Tuesday. Smartphone shipments for the period jumped 24 percent to 118 million units.

Huawei warned that it would face difficulties in the future that could hit the pace of short-term growth. The company may be starting to feel the pinch of U.S. restrictions on the sale of American technology, something that threatens to cripple its business, and it remains unable to sell certain fifth-generation wireless products to lucrative markets such as Japan, Australia and New Zealand. Revenue growth, while up from 19 percent in 2018, was down sharply from the 39 percent of the March quarter.

Executives have told staff to brace for tougher times over the remainder of 2019, people familiar with the matter have said. Huawei remains on a U.S. blacklist that threatens to choke off the components and software needed to run its smartphone and networking businesses. Those sanctions only took effect in May and may not have been fully reflected in its bottom line.

Billionaire founder Ren Zhengfei said just last month that the sanctions would curtail its revenue by roughly $30 billion (¥3.3 trillion) in the coming two years, wiping out its growth.

Huawei is preparing for the worst and is pulling out all the stops right now to boost sales, assigning as many as 10,000 engineers across three shifts a day to work on alternatives to American software and circuitry. It’s said to be making adjustments to businesses most threatened by the curbs, reassigning employees from the carrier and enterprise units to the faster-growing consumer division.