Huawei’s smartphone business is struggling with US sanctions preventing it from buying chips and other components from key suppliers.
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BEIJING — Chinese telecom giant Huawei said on Thursday that its first-quarter revenue fell nearly 14% from a year earlier, while its profit margin more than halved.
“Our consumer business was badly affected, and ours [information and communications technology] The infrastructure business has seen steady growth,” said Ken Hu, Huawei’s rotating chairman, in a statement. “In 2022 we still face a challenging and complicated business environment.”
The company reported revenue of 131 billion yuan ($20.63 billion) for the first quarter. That’s down 13.9% from the same period last year and down more than 27% from the fourth quarter of 2021.
First-quarter profit margin of 4.3% was less than half the 11.1% reported a year earlier.
Hu said the quarterly results were in line with the company’s expectations and that Huawei has increased its investments in research and development.
Huawei’s smartphone business has suffered from US sanctions. The Trump administration has blacklisted the company, preventing it from buying critical components like advanced semiconductors from US suppliers.
According to Counterpoint Research, smartphone sales in China across brands fell 14% year over year in the first quarter.
Huawei saw the sharpest decline of seven brands, ranking sixth by market share and with a 64.2% year-on-year drop in revenue, the report showed. The company’s smartphone sales in China also fell 12% sequentially.
According to Counterpoint, Apple was the only other company on the list to see sales in China decline 23% sequentially. However, the iPhone maker’s sales in China still grew 4.4% year over year in the first quarter.
Looking for other companies
Huawei has emphasized hiring talent and developing other business areas to counteract the impact of falling smartphone sales.
While the company said it will not build its own cars, Huawei has notably entered the hot electric car market by integrating its HarmonyOS operating system and other technologies into cars made by traditional Chinese car brands.
Rotating Chairman Hu said earlier this week that at least two more car models using Huawei technology would be launched this year. The first car to use HarmonyOS was the Aito M5, which began deliveries earlier this year.
Huawei said its smart car R&D team has reached 5,000 employees, and the company’s investment in auto-tech-related operations has reached $1 billion last year.