Chinese telecommunications giant Huawei on Tuesday reported a 19.1 percent rise year on year in sales revenue, at 858.8 billion yuan (around 122.9 billion U.S. dollars) in 2019, boosted by a 34-percent surge in sales for its consumer business.
Meanwhile, the company spent 15.3 percent of its revenue, or 131.7 billion yuan (about 18.6 billion U.S. dollars), on research and development last year, with its total R&D expenditure over the past decade now exceeding 600 billion yuan.
The consumer business, which accounts for almost half of the whole business, continued to see robust growth last year, up by 34 percent year on year at 467.3 billion yuan, with a total of 240 million smartphones shipped in 2019.
While the other two parts, the carrier, which includes 5G mobile network equipment, and the enterprise, saw a total revenue of 296.7 billion yuan and 89.7 billion yuan respectively, up by 3.8 percent and 8.6 percent year on year respectively.
“2019 was an extraordinary year for Huawei,” said Eric Xu, Huawei’s rotating chairman, noting that despite enormous outside pressure, the “business remains solid.”
China contributed 52.68 percent of Huawei’s global sales in 2019, surging 36.2 percent to 506.7 billion yuan, followed by Europe and the Middle East, Asia-Pacific region excluding China as well as the Americas, at 28.95 percent, 11.59 percent and 6.78 percent respectively.
In 2019, the company’s net profit stood at 8.971 billion U.S. dollars and cash flow from operating activities surged by 22.4 percent to 13.085 billion U.S. dollars from a year earlier.
“We will need to further adapt to the long-standing restrictions imposed by the Entity List, while also addressing the impact of the ongoing COVID-19 pandemic,” said Liang Hua, chairman of the board.
The U.S. government, which added the Chinese tech giant on the Entity List over what it claimed to be “national security concerns” last May to ban U.S. companies from working with it, extended a license at the beginning of March, for a fifth time, allowing U.S. companies to continue doing business with Huawei until May 15.
According to Reuters, sources before said senior officials in the Trump administration agreed to new measures to squeeze the global supply of chips to Huawei Technologies, namely foreign companies using U.S. chipmaking equipment would need a U.S. license before supplying certain chips to Huawei.
Based on the sources, the rule change is aimed at restricting sales of chips to Huawei by Taiwan Semiconductor Manufacturing Co, a major producer of chips for Huawei’s HiSilicon unit, as well as the world’s largest contract maker.
Whether U.S. President Donald Trump will sign off on the rule change is up in the air.
When answering how Huawei responds to possible stricter U.S. chip export controls, Xu said “I hope it’s fake news, or we might see an endless flow of disastrous aftermath. It is difficult for any player in the global industry chain to stand alone.”
“Once Pandora’s Box is open, it may be devastating not only to Huawei, but to the globalized industrial ecology,” he added, expecting that “the global industry chain can work together to provide trusted products to global customers.”
Xu believed that the Chinese government will hit back rather than just stand by and watch Huawei be slaughtered.
“Even if this situation happened, Huawei and also other Chinese companies can choose to buy chipsets from Samsung from (South) Korea, MTK from Taiwan, and [Unisoc] in China, and use those companies to develop chips.”
The COVID-19 outbreak has disrupted commercial and economic activities in China and certain countries around the world, the company said, noting that Huawei has resumed production in China and is working with global partners to address the impact of the pandemic, which might have a long-term impact on supply chains.
Xu, however, predicted 2020 would be the most difficult year yet for the company because of the U.S. measures.