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Huawei crackdown

Huawei posts largest-ever revenue drop amid US crackdown

Restricted access to chips stifles Chinese tech titan's consumer business

Huawei has struggled to secure vital chips for its consumer electronics business, once its flagship segment.     © AP

TAIPEI -- Huawei Technologies on Friday reported its biggest-ever decline in revenue, with its first half figure plunging more than 29% on the year due to a U.S. clampdown on the company's access to key chip supplies.

The Chinese tech champion said revenue for the first half reached 320.4 billion yuan ($49.56 billion). The company's net profit margin, however, improved to 9.8% from 9.2% in the same period last year.

Huawei attributed the revenue decline to "external factors" hampering its once vibrant consumer electronics business. The company was the world's biggest smartphone maker as recently as the second quarter of last year but has since fallen out of the global top five.

Washington first added Huawei to its trade blacklist in 2019, citing national security concerns. Increasingly strict controls have since cut off the company from the global supply chain, as suppliers who use any U.S. technology to serve the company must receive Washington's approval.

The revenue of the company's consumer electronics business dropped nearly 47%, or more than 120 billion yuan, from a year ago. Consumer electronics sales, mainly smartphones, used to contribute more than 50% of Huawei's total revenues.

"The U.S.' unfair oppression brought direct impact to the consumer electronics business, especially on the smartphone side. The spinoff of [Huawei budget brand] Honor also led to the fall in revenue," a company spokesperson told Nikkei Asia.

Huawei's telecom equipment business, another growth pillar for the company, saw revenue drop 14% on the year. It attributed this to the slowing pace of 5G deployment in China. The company told Nikkei Asia it is still "optimistic" about its telecom business, as China has been ramping up deployment of the next-generation network standard since July.

The company's enterprise business group, which includes digital solutions for smart cities, finance, transportation, energy, manufacturing and education, was the only business group that reported year-on-year growth in revenue. The company said overseas markets outperformed domestic growth in this segment for the first half of the year.

Eric Xu, Huawei's rotating chairman said in a statement that accompanied the earnings release that his company's aim "is to survive, and to do so sustainably." Hsu said despite the decline in revenue from the consumer business, "we are confident that our carrier and enterprise businesses will continue to grow steadily."

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