Huawei's Slowed Growth

Issue 42

10.26.20 - Huawei’s revenue growth slowed sharply in the third quarter while its margin dipped as U.S. sanctions disrupt its business. Revenue for the September quarter came in at 217.3 billion yuan ($31.91 billion), up just 3.7% from the 209.5 billion yuan recorded in the same period last year.

In the first nine months of 2019, Huawei’s revenue growth was 24.4%. For the first nine months of the year, revenue totaled 671.3 billion yuan ($98.57 billion), up 9.9% from the 610.8 billion yuan reported in the same period last year. That is a significant slowdown in growth. Meanwhile, Huawei’s net profit margin was 8% for the first nine months of the year, down from 8.7% in the same period last year.

Washington’s sanctions are clearly hurting the Chinese technology giant. Last year, Huawei was put on a U.S. export blacklist known as the Entity List. Google cut ties with Huawei meaning the Chinese firm’s smartphones could no longer use licensed Android mobile operating system software. That has hurt Huawei’s smartphone sales outside of China, while its domestic market has thrived.

Huawei is now facing even greater challenges to its business. Earlier this year, Washington slapped additional sanctions on Huawei which has threatened to cut off supplies of semiconductors from its supplier, TSMC. This could seriously cripple its smartphone business going forward.

Source: Financial Times