Huawei Growth Dives Amid US Ban & COVID19
Chinese electronics giant, Huawei, has reported a significant slowdown in Q1 revenue following its US ‘blacklisting’ and the COVID19 pandemic – up 1.4% YoY versus a 39% YoY increase in 2019.
For the quarter, revenues notched CNY182.2 billion (~$25.72 billion), with quarterly net profit margin hitting 7.3%, down from 8% last year.
The news comes after the United States barred Huawei’s access to several national technologies on security grounds, impacting its supply chain and international smartphone sales.
As Huawei is privately owned and opts to financially disclose, the Chinese giant refrained from revealing Q1 net profit and smartphone unit sales.
Despite a sharp slowdown in growth, Huawei Vice President, Victor Chang, has described performance as “resilient” amid the impact of the US ‘entity list’ and coronavirus.
According to Strategy Analytics, global smartphone sales slumped a notable 38% in February. Chinese sales were especially hit as it fought the COVID19 pandemic early – historically Huawei’s primary revenue earner.
Last year, Huawei’s audited annual report recorded a 6% jump in profit – its slowest pace in three years. High R&D costs stemming from supply chain shifts after its US blacklisting continue to hit earnings.
Huawei has consistently rebuffed claims its 5G technology poses security threats and has links to the Chinese government. Despite hesitation from some Western governments, the company asserts the number of 5G contracts one won continued to grow over the last year.