Huawei Reports Nearly 30 Percent Revenue Drop Amid U.S. Sanctions

Chinese technology company Huawei reported a 29.4 percent decrease in revenue in the first half of 2021 compared to the same period last year, the Associated Press reported. The drop came as U.S. sanctions imposed to address security concerns caused smartphone sales from the company to drop.

In 2019, former President Donald Trump blocked U.S. companies from selling technology and services to Huawei, such as Google Maps, processor chips and music, the Associated Press reported. The company's $70.2 billion in reported revenue for the first half of 2020 dropped to $49.6 billion in the first half of 2021, due in part to a November sale of its Honor smartphone product.

"Our aim is to survive, and to do so sustainably," said Eric Xu, a rotating Huawei chairman, in a statement. "Despite a decline in revenue from our consumer business caused by external factors, we are confident that our carrier and enterprise businesses will continue to grow steadily."

For more reporting from the Associated Press, see below.

Huawei Executive Eric Xu
Eric Xu, rotating CEO of Huawei, said that the company's aim is to "survive" after reporting a nearly 30 percent drop in revenue in the first half of 2021. Xu gives a conference during the Mobile World Congress, on February 28, 2017 in Barcelona, Spain. Joan Cros Garcia/Corbis via Getty Images

Sales by Huawei's consumer unit, which includes smartphones, tumbled 47% compared with figures reported for the first half of 2020. That unit was 42% of total revenue.

Sales of network gear and other technology to phone and internet companies fell 14.2 percent while revenue for the enterprise unit rose 17.2 percent.

The company gave no profit figure but said its net margin was 9.8 percent. That would be a decline from the 11.1 percent reported for the first quarter.

Huawei, headquartered in the southern city of Shenzhen, near Hong Kong, reported earlier it eked out a 3.8 percent profit gain in 2020 to 891.4 billion yuan ($135.8 billion), but Xu warned 2021 would be a "challenging year."

Huawei has responded by emphasizing its sales in China and for electric and self-driving cars, industrial networks and other applications that are less vulnerable to U.S. pressure.

Huawei has a stockpile of U.S. chips for high-end smartphones but executives have said those were being used up. Huawei designs its own chips but U.S. controls block suppliers from using American technology to produce them.

Huawei fell out of the top five smartphone brands in China by sales in the three months ending in June for the first time in more than seven years, according to Canalys. Honor was No. 5 but its market share fell to 9 percent from 14 percent a year earlier.

"Smartphone brands are ferociously competing to exploit the decline of Huawei," said Canalys analyst Amber Liu in a July 29 report.

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 to try to defuse Western security concerns.

Huawei Smartphone
A customer looks at a newly launched Huawei P50 mobile phone at a Huawei store in Hangzhou, in China's eastern Zhejiang province on July 30, 2021. STR/AFP via Getty Images