Huawei Technologies relied heavily on Chinese 5G network demand last year as foreign sanctions and trading bans cut into overseas market growth, the company's annual report published Wednesday showed.

Overall revenue increased 3.8% year on year to reach 891.4 billion yuan ($136.7 billion) in 2020, 66% of which came from domestic markets compared with 59% the year before.

While local demand grew to account for 15% of total revenue last year, overseas revenue fell by 24.5% and 12.2% in North America and Europe, respectively, as Huawei fought to expand its 5G network in the face of crippling U.S. sanctions.

"It's quite clear that upstream suppliers, primarily U.S. suppliers, are suffering from the disruption just like Huawei and its consumers. We are all paying a price," deputy chairman Ken Hu said on the earnings call Wednesday afternoon.

Despite this political tension, the company's net profit also rose 3.2% to 64.6 billion yuan thanks to a massive 5G initiative rolled out by the Chinese government last year.

China has invested more than $40.2 billion to date in its national 5G network, the most of any country in the world, with roughly 700,000 base stations currently in operation, according to industry and information technology vice-minister Liu Liehong.

Huawei rode this wave last year, in part thanks to some advanced planning and hoarding of materials usually shipped in from overseas.

"In response to unfair sanctions over the past two years, we purchased stockpiles with a lot of cash in order to satisfy the needs of our customers," Hu said.

While revenue from consumer electronics grew 3.3% on the back of increased domestic demand, smartphone shipments fell 21.5% to leave Huawei trailing Samsung, Apple, Vivo and Xiaomi in terms of units produced as the company continues to face opposition abroad.

Huawei's attempt to win 5G contracts overseas is one of "America's greatest national security threats," former U.S. Attorney General William Barr said last February, leading the Chinese network to be blacklisted by telecom service providers worldwide.

In Europe, more than 40 companies snubbed Huawei for Samsung and other rivals, while tension over 5G contracts has been fanning political tensions between China and Australia for years now with many politicians flagging potential security concerns and fears of spying.

All this bodes poorly for Huawei's business prospects abroad, and deputy chairman Hu ended the earnings call with a plea to depoliticize the telecommunications business.

"If a political decision is damaging players along the entire value chain, shouldn't it be reviewed and corrected?" he asked.