Huawei’s Quarterly Growth Experiencing Downturn
Huawei has not only had to combat the financial effects of the global pandemic but also the sanctions placed on them by the US and in particular President Trump. The US had been threatening sanctions on the Chinese based company for sometime until the sanctions officially took effect last month. This has already put a marked dent into the companies ability to produce the quality of cellphone they have become known for.
Sales grew by 3.7% to $32 billion from one year earlier, compared to the 23% in the second quarter between January-September reported by Huawei. 9-month revenue was up 9.9% year-on-year and its net profit margin for the period was 8%. Once US sanctions kicked in, Huawei no longer received critical semiconductors and other important tech to make their phones and maintain their servers.
Huawei are already looking to the future though, as they continue to obtain and store crucial radio chips for the much anticipated rollout of 5G technology in 2021 for their Chinese carriers. The company issued a statement to put to rest any concerns explaining that “Huawei’s global supply chain was put under intense pressure and its production and operations saw increasing difficulties but business results have essentially been met in the first three quarters.”
A challenging history
It is no secret that there is little love lost between the US and China as the sanctions were already being talked about in 2018 based on supposed national security concerns from the US side. The final nail in the coffin came earlier this year when President Trump enforced restrictions that completely closed any loopholes that the Chinese company was operating in to gain access to the US tech. The semiconductors Huawei had been purchasing from the US were vital to keeping their consumer market afloat.
While Huawei looks to steady the ship and prepare for future growth, Samsung have been revelling in their biggest competitors downturn as they look to once more replace them as the world’s largest smartphone providers. While Huawei have experienced difficulty, Samsung posted one of their best quarters yet with an operating income of $10.6 billion. Not only have they between their estimated operating income but the value of Samsung shares were up by as much as 1,3% on Thursday.
Despite seemingly having to contend with US sanctions, Samsung resurgence and the global pandemic, Huawei are still looking to the future as they plan to focus on providing AI, Cloud 5G and computing to business clients. While Huawei haven’t explicitly given a breakdown on the performance of their individual divisions last quarter the Chinese giant seems to be on course to remedy what has been a difficult year.