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Huawei's first-half revenue growth accelerates

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TAIPEI -- Huawei Technologies, the Chinese telecommunications giant, accelerated its revenue growth in the first half of 2016, overcoming a decline in global demand for smartphones by overpowering rivals Apple and Samsung Electronics in its domestic market.

Huawei booked sales of 245.5 billion yuan ($36.7 billion) in the January-June period, a 40% jump from a year earlier. In comparison, revenue for the first half of 2015 rose 30%. However, the company's operating margin fell to 12% in the first half of this year, from 18% a year earlier.

Huawei's Chief Financial Officer Sabrina Meng attributed the sales increase to steady growth across the company's key business areas, including telecommunications and networking equipment, cloud computing and storage products, and smartphones. However, the company did not provide a breakdown of its revenue.

"We are confident that Huawei will maintain its current momentum and round out the full year in a positive financial position, backed by sound ongoing operations," Meng said in a statement.

Huawei, the world's third-largest smartphone maker and the biggest in China, shipped around 56 million phones in the first half of 2016, an increase of more than 28% from a year earlier, according to Taipei-based research firm TrendForce. Samsung and Apple shipped 158 million and 89.5 million phones, declining 2.7% and 16.9%, respectively.

Huawei's full-year revenue rose 37% last year to 395 billion yuan. The company's carrier division, which includes its telecommunication equipment and base station-related businesses, accounted for almost 60% of sales. The consumer electronics business, including smartphones, contributed 33% of revenue, surging almost 73% to $129.1 billion yuan from a year earlier.

While Huawei's consumer electronics business remained one of its fastest-growing divisions in the first half of this year, it is up against strong competition at home. "Huawei is facing fierce challenges from other domestic rivals such as OPPO and Vivo," said Avril Wu, an analyst at TrendForce. "It might not enjoy the same robust growth in 2016 that they had a year ago."

Still, Huawei remains dominant in China in terms of technology and scale. For instance, its chip arm Hisilicon Technology is now capable of designing high-end chips comparable to those offered by Qualcomm of the U.S., Wu said.

Huawei has become a top global telecommunications networking equipment provider, rivaling Cisco and Ericsson. Its expanding presence around the world means the Chinese conglomerate will have a strong say in the development of advanced fifth-generation, or 5G, wireless communication technologies, said Mark Li, an analyst at Sanford C. Bernstein.

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