Huawei says its first-half revenue jumped 23.2% despite political headwinds

A Huawei logo is pictured at their store at Vina del Mar, Chile July 18, 2019.

Rodrigo Garrido | Reuters

China’s Huawei reported a 23.2% year-over-year increase in revenue for the first six months of 2019 year despite facing political headwinds.

The company said its total revenue came in at 401.3 billion yuan ($58.26 billion) and its net profit margin for the period was 8.7%. In a press release, the tech giant said its operations are “smooth” and that the “organization is as sound as ever.”

Huawei’s carrier business, which sells core networking equipment, reported 146.5 billion yuan in sales revenue.

To date, the company says it has secured 50 commercial 5G contracts with leading global telecommunication carriers. 5G refers to the fifth generation of high-speed mobile internet — it’s expected to be a major factor in the tech industry for years to come.

For its part, Huawei is considered to be one of the leading names in the race to develop the nascent 5G technology. But the company is facing mounting fears that its technology could enable Chinese espionage through those high-speed mobile networks. Huawei has repeatedly denied that its products represent any risk.

Still, countries like the United States, Australia, New Zealand and Japan have restricted the company’s participation in 5G development within their borders.

In May, the United States added Huawei and its affiliates to the Bureau of Industry and Security (BIS) Entity List, which effectively halted its ability to do business with American companies. Later, Washington softened its stance somewhat and the tech company could potentially be used as a bargaining chip in ongoing trade negotiations with Beijing.

“Revenue grew fast up through May,” Huawei Chairman Liang Hua said in a statement. “Given the foundation we laid in the first half of the year, we continue to see growth even after we were added to the entity list. That’s not to say we don’t have difficulties ahead. We do, and they may affect the pace of our growth in the short term.”

Huawei Founder and CEO Ren Zhengfei previously said in June that the U.S. government had launched “precise ‘strikes’ against us, with each ‘strike’ hitting our vital parts.”

He said at the time that Huawei’s production capacity may decrease in the coming years and its sales revenue “will be about 30 billion US dollars lower than forecasted.” Ren previously predicted that Huawei’s annual sales revenue would be about $100 billion in 2019 and 2020.

For 2018, Huawei topped $100 billion revenue for the first time.

Huawei phones dominate China

The technology giant’s consumer business, which sells smartphones, tablets, PCs and wearables, reported 220.8 billion yuan in revenue.

Huawei said it shipped 118 million units of smartphone for the first half of 2019, resulting in a 24% on-year jump. That figure includes its Honor-branded phones,

The company is already the world’s second-largest smartphone maker by shipment volume. In China, Huawei consolidated its lead by taking 38.2% market share in the three months that ended in June as major rivals lost ground, according to a new report from research firm Canalys.

In total, 64% of smartphones that the company shipped for the quarter were in China, according to Canalys data.

“Huawei’s addition to the United States Entity List caused uncertainty overseas, but in China it has kept its foot on the accelerator,” Mo Jia, an analyst at the research firm, said in the report. “Its core strategy remains investing in aggressive offline expansion, and luring consumers from rival brands.”

“The US-China trade war is also creating new opportunities,” Mo Jia added.

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