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Huawei shrinks further despite enterprise gains

Huawei's fortunes continue to wilt under the impact of US sanctions and loss of market access, its first-half result reveals.

The Chinese firm Friday reported interim revenue of 301.9 billion yuan (US$44.8 billion), down 5.9% from last year and its lowest first half total in five years.

The reported net margin of 5% was an improvement on Q1 but below the 9% it achieved in the previous three years.

Total revenue has shrunk by a third since 2020, mostly because of the sharp decline in its handset business, which culminated in the forced disposal of its Honor handset unit in the first half of 2021 (see Huawei H1 down 29% as handset business plunges).

Device sales sank further in the half, with revenue down 25% to CNY101.3 billion ($15 billion). Two years ago Huawei's consumer unit accounted for 56% of sales and the company ranked in the top five world handset players. Now it represents just one third of total revenue.

A sidelined handset business

With the handset business sidelined, Huawei's focus has returned to its core carrier equipment business and its enterprise unit.

"While our device business was heavily impacted, our ICT infrastructure business maintained steady growth," Ken Hu, Huawei's current chairman, said in a statement.

The carrier division is once again the biggest source of revenue, racking up CNY142.7 billion ($21.2 billion) in sales, a 4% improvement on last year. The unit has been buoyed by China's final big 5G tenders as well as contracts in markets such as eastern Europe, Middle East and southeast Asia where it has not been excluded.

The diverse enterprise unit, which is now central to Huawei's ambitions, put on an 11% growth spurt to achieve CNY55 billion ($8.2 billion) in sales.

Huawei did not break out any segment numbers but besides its established security and networking solutions it is one of China's biggest cloud providers and is making big bets on AI and smart car technologies.

Additionally, it has rolled out a series of cross-functional teams targeting more than a dozen different verticals such as ports, government and coal-mining.

"Moving forward, we will harness trends in digitalization and decarbonization to keep creating value for our customers and partners, and secure quality development," Hu said.