China's Huawei says 2020 sales rose despite US sanctions
BEIJING — Chinese tech giant Huawei said Wednesday it eked out higher sales and profit last year but growth plunged after its smartphone unit was hammered by U.S. sanctions imposed in a fight with Beijing over technology and security.
China’s first global tech brand reported sales of phones,
network gear and other technology rose 3.8% over 2019 to 891.4 billion yuan
($135.8 billion), a decline from the previous year’s 19.1% growth. That was
propelled by a 15.4% gain in China, while sales in other markets shrank.
Huawei Technologies Ltd. is struggling to keep its global
markets after then-President Donald Trump in 2019 cut off access to U.S.
processor chips and other technology. Huawei was the top-selling smartphone
brand in the second quarter of 2020 but fell out of the global top five after
losing Google's music and other popular services.
“We think this is a very unfair situation to Huawei. It has
damaged us a lot,” chairman Ken Hu said at a news conference at Huawei
headquarters in the southern city of Shenzhen.
The results reflect the damage from sanctions and point to a
possible future for Huawei that focuses on China and on networks and other
products that are less vulnerable to foreign pressure.
Huawei, which denies accusations it might aid Chinese
spying, sold its lower-priced Honor smartphone brand in hopes of reviving sales
by separating it from the sanctions on the parent company.
Huawei says it has a stockpile of U.S. chips for its
high-end smartphones but executives have said those are running out. Trump
expanded sanctions by barring global suppliers last year from using U.S.
technology to produce chips for Huawei.
Economists and political analysts expect little change under
President Joe Biden, who succeeded Trump in January. The founder of Huawei, Ren
Zhengfei, said in February he sees little chance that sanctions will be lifted.
Hu didn’t respond directly when asked how Huawei would cope
if sanctions remain and when China’s fledgling tech industry might supply the
advanced chips it needs. But he said U.S. suppliers have lost $10-20 billion in
annual sales to Huawei and expressed hope for unspecified “help from national
leaders around the world” to restore interaction with global chip suppliers.
“We hope they can help us to restore this kind of cooperation
in the semiconductor industry,” he said.
Hu expressed confidence global sales will rebound once the
coronavirus pandemic is brought under control.
“I’m pretty positive about 2021 performance in regions
outside China, but I’m not able to give you a definitive forecast," he
said.
The clash with Washington prompted the ruling Communist
Party to make transforming China into a self-reliant “technology power” this
year's top economic priority. The Finance Ministry announced this week
chipmakers will be exempt from import taxes on equipment and raw materials
through 2030.
Huawei said 2020 profit edged up 3.2% to 64.6 billion yuan
($9.8 billion), decelerating from 2019’s 5.6% growth.
Sales growth was the weakest since a one-year contraction in
the early 2000s after the tech industry was shaken by the collapse of share
prices for internet companies on Wall Street, according to the company.
Sales of smartphones and other consumer products rose 3.3%
over 2019 to 487 billion yuan ($74.1 billion), or 54% of total revenue. That
was down from a 34% increase in 2019.
In a show of technical prowess, the company unveiled a
folding smartphone in February with an eight-inch-wide (20-centimeter-wide)
screen. But it said the Mate X2 will be sold only in China, possibly reflecting
shortages of processor chips to manufacture it.
Research and development spending, already among the highest
for any company, rose to 141.9 billion yuan ($21.6 billion), according to
Huawei. That was 16% of revenue, up from about 10% in previous years.
Sales in 2020 were hurt by the coronavirus pandemic. The
15.4% sales growth was less than half of 2019’s 36.2%.
Network equipment sales to global phone carriers were flat
at 302.6 billion yuan ($46.4 billion) after Washington pressured European and
other allies to exclude Huawei as they upgrade to next-generation technology.
Chinese officials accuse Washington of using phony security
accusations to hurt a rising competitor.
The two governments, along with Canada, are fighting over
the arrest in Vancouver of a Huawei executive, Meng Wanzhou, who is Ren’s
daughter. She is fighting extradition to the United States on charges related
to possible violation of U.S. trade sanctions on Iran.
Two former Canadian diplomats were arrested in China and are
being prosecuted on spying charges in what is widely seen as an attempt to
pressure Prime Minister Justin Trudeau’s government to release Meng.
As more people worked remotely, technology sales to
manufacturers, health care and other businesses jumped 23% in 2020 to 103.4
billion yuan ($15.4 billion), up from 2019’s 8.6% gain.
Huawei says it is owned by the Chinese employees who make up
half its workforce of 197,000 in 170 countries. The company began reporting
financial results a decade ago in an attempt to defuse Western security
concerns.
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