Huawei’s Resilience: Emerging Stronger Amidst U.S. Sanctions
Anticipated Triumph at Annual Results
China’s Huawei is poised to report a significant victory over the challenges posed by U.S. sanctions during its upcoming annual results announcement. The company’s strategic shift towards software development, advancements in chip production, and a rapidly expanding smart-driving technology sector have collectively helped it transition from “survival mode” to a root for future growth.
Strong Financial Outlook
Huawei is expected to confirm an impressive 860 billion yuan ($118 billion) in revenues for the previous year, falling just short of its peak in 2020 when revenues reached 891 billion yuan. This growth trajectory comes despite dwindling chip stockpiles and U.S. restrictions that heavily impacted its consumer business, which saw revenues cut by roughly half. The company’s chairman had already disclosed projections for 2024 revenue back in February.
Profit Reports and Market Recovery
In addition to revenue, Huawei will report its full-year profit. The company encountered a 13.7% decline in net profit for the first nine months of the previous year, marking a challenging period for the tech giant.
Adapting to Sanctions
Huawei executives have attributed the company’s current “survival mode” to actions taken by Washington, which have compelled them to diversify and innovate. This adaptation has led to the creation of products designed as alternatives to Western technologies while fostering partnerships with local Chinese authorities and state-backed firms.
Increased Confidence in Local Tech Development
Recently, Huawei has adopted a more confident public stance. The company’s founder, Ren Zhengfei, addressed concerns among Chinese leadership regarding the availability of domestic chips and operating systems, noting progress in these areas during a conversation with Chinese President Xi Jinping in May.
Sectoral Growth and Innovation
Although Huawei has not detailed its revenue sources extensively, it has indicated that its consumer business is on an upward trajectory. Additionally, its investment in the automotive sector has rapidly accelerated, underscoring its eagerness to adapt.
Smartphone Market Dynamics
According to consultancy Isaiah Research, Huawei is estimated to have shipped over 45 million smartphones in 2024—a significant increase of 25% compared to the previous year. However, challenges remain due to yield rates on chips, which continue to constrain the company’s recovery.
Resilience and Industry Impact
“Huawei has demonstrated remarkable resilience in the face of a national state-led effort to undermine it,” said Paul Triolo, a partner at DGA-Albright Stonebridge Group. “This situation has arguably stimulated innovation and collaboration among Chinese firms across the IT landscape.”
Exploring New Opportunities
In response to sanctions from the U.S., Huawei has broadened its focus to include building 5G infrastructure for mining operations and supplying energy storage systems for data centers, indicating a willingness to explore new market opportunities.
Self-Reliance in Software
Deprived of access to Google’s Android and Oracle, Huawei has developed its own operating system, HarmonyOS. The company claims this operating system is now operational on over a billion devices, along with its internal software management system known as ‘MetaERP.’
Chip Development Initiatives
Banned from utilizing U.S. semiconductor technology, Huawei has invested in creating competitive chips to rival those produced by leading AI chipmaker Nvidia. This move indicates Huawei’s intent to innovate despite restrictive measures.
Advanced Driving Technology
Additionally, Huawei has emerged as a key player in advanced autonomous driving technology. Collaborating with state-owned automakers, Huawei supports the revival of local electric vehicle manufacturers.
Partnerships and Sales Growth
The company has collaborated with Dongfeng Motor-backed Seres to market Aito-branded vehicles, achieving a remarkable threefold increase in sales last year. Popular models such as the M7 and M9 are equipped with Huawei’s cutting-edge driver assistance systems and are sold through the company’s retail outlets across the nation.
Expanding Collaborations
Huawei has also initiated partnerships with other notable car manufacturers including Chery, BAIC, JAC Group, and SAIC Group as part of its commitment to innovate within the automotive sector.
Future Aspirations
Looking ahead, Huawei aims to embed artificial intelligence capabilities into its industrial communications services and expand its software systems for connected devices, as reported by state media.
Global Market Strategy
In addition to its domestic advancements, Huawei has signaled its intention to compete more robustly in international smartphone markets. The company launched its foldable Mate XT smartphone in Malaysia earlier this year amid great fanfare.
Challenges in Western Markets
Despite these strides, full access to Android remains elusive, potentially hindering a return to its previous stronghold in Western consumer markets. However, the company’s data infrastructure presence has grown, particularly in regions like the Middle East.
A Patchwork Global Presence
“Huawei’s international footprint will likely resemble a patchwork,” noted Triolo. “However, in certain sectors, such as an alternative AI stack, it might find the potential to dominate in key markets.”
Conclusion
As Huawei navigates the challenges posed by U.S. sanctions, its adaptability and resilience are evident. By innovating across various sectors, Huawei not only strives for growth but also reaffirms its position as a significant player in the global technology landscape.
Questions and Answers
- What financial data is Huawei expected to report?
Huawei is anticipated to report revenues of 860 billion yuan ($118 billion) for the last year, nearly reaching its 2020 peak. - How has Huawei adapted to U.S. sanctions?
Huawei has diversified its business lines, created alternative technologies, and partnered with local entities to mitigate the effects of sanctions. - What is HarmonyOS?
HarmonyOS is Huawei’s proprietary operating system developed in response to the loss of access to Google’s Android, claimed to be operational on over a billion devices. - How has Huawei fared in the smartphone market?
Huawei likely shipped over 45 million smartphones in 2024, marking a notable increase of 25% from the previous year. - What future ambitions does Huawei have?
Huawei aims to integrate AI into industrial communication services and expand its software offerings for connected devices while enhancing its competitive stance in global markets.
