Huawei’s growth declined sharply due to US sanctions

The Huawei headquarters building is painted on July 14, 2020 in Reading, UK.

Matthew’s Children | Reuters

Guangzhou, China – Huawei’s revenue growth slowed sharply in the third quarter, while its margins are submerged in the form of US sanctions.

Revenue in the September quarter came to 217.3 billion yuan ($ 31.91 billion), a mere 3.7% from the 209.5 billion yuan recorded in the year-ago period.

For the first nine months of the year, revenue was 671.3 billion yuan ($ 98.57 billion), up 9.9% from 610.8 billion yuan in the year-ago period. This is a significant slowdown in growth. In the first nine months of 2019, Huawei’s revenue growth was 24.4%

Meanwhile, Huawei’s net profit margin for the first nine months of the year was 8%, down from 8.7% in the year-ago period.

Washington’s sanctions are clearly hurting the Chinese technology giant. Last year, Huawei was placed on an American export blacklist known as the Entity List. Google cut ties with Huawei meaning the Chinese firm’s smartphones can no longer use licensed Android mobile operating system software. This has hurt Huawei’s smartphone sales outside China, while its domestic market has shrunk.

Huawei did not break into which parts of its business contributed to revenue growth. Earlier this year, Huawei stated that its consumer business, which includes its smartphones, was responsible for the nearly $ 12 billion in revenue seen in its own goals versus 2019.

For the first three quarters of 2020, Huawei said the results “basically meet expectations.”

The company said in a press release, “As with COVID-19 worldwide, Huawei’s global supply chain was under intense pressure and difficulties in its production and operation were increasing.”

“During the issuance, the company stated that it would do its best to find solutions, survive and move forward and fulfill its obligations to customers and suppliers.”

Huawei now faces even greater challenges. Earlier this year, Washington slapped further restrictions on Huawei, threatening to cut semiconductor supplies from its main supplier TSMC. It could cripple its smartphone business, analysts previously told CNBC. Huawei has very few options to meet these restrictions.


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