China's tech giant Huawei Technologies announced that it is "out of crisis mode" after reporting a modest 0.9% increase in annual revenue, attributing its progress to substantial investments in research aimed at replacing components affected by sanctions. The revenue growth is in line with the company's forecast and indicates a degree of stability following successive rounds of US export controls since 2019 that severely impacted its once-dominant smartphone business.
However, Huawei reported a net profit of 35.6 billion yuan ($5.18 billion), a significant decrease of roughly two-thirds from 2021, when the sale of its Honor mid-range smartphone division boosted profits. The decline remains severe, even compared to 2020, with a 44% drop.
Senior executives from the leading 5G telecommunications equipment supplier discussed the "fatal impasse" they faced and how they "fought their way out" after Washington restricted its access to chips and chip-design tools from US companies. Meng Wanzhou, the company's Chief Financial Officer and daughter of its founder, stated, "2022 is the year that we pulled ourselves out of crisis mode. We're back to business as normal."
The US government claims Huawei poses a security risk, which the company denies. Meng was detained for three years in Canada due to alleged attempts to conceal Huawei-linked companies' efforts to sell equipment to Iran in violation of US sanctions. Meng's charges were dismissed, and she returned to China in 2021. She is slated to assume the role of chairperson on a rotating basis beginning Saturday.
Huawei's R&D expenditure increased by 13.2% to 161.5 billion yuan ($23.50 billion), accounting for a quarter of the company's revenue. According to Meng, this investment has helped Huawei replace components in its products affected by US trade sanctions. In February, founder Ren Zhengfei disclosed that more than 13,000 parts had been replaced.
Chairman Eric Xu mentioned that the company is investing in 5.5th and 6th generation technology and green development, expressing hope that 5.5G products can be introduced by 2025. Regarding recent remarks about electronic design automation (EDA) tools for chips at and above 14-nanometer technology, Xu said Huawei had achieved this in collaboration with its partners, allowing the company to design chips using its own EDA tools.
Huawei, like China's semiconductor industry, has been targeted by US export control measures. Xu said the company would support efforts to enhance industry self-reliance without providing further details.
Huawei's 2022 revenue reached 642.3 billion yuan, a slight increase over 2021 but far below the record 891.3 billion yuan achieved in 2019 when it was the leading Android smartphone vendor worldwide. The company's enterprise division revenue surged 30%, while its telecommunications business rose 0.9% and its consumer electronics business fell 11.9%. Huawei's asset-to-liability ratio was 58.9%, and its net cash balance stood at 176.3 billion yuan.
