Will Huawei's net profit decrease by up to 40% year-on-year as US sanctions continue?


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On October 27, 2022, Huawei announced its financial results for the first three quarters of 2022. Huawei revealed that revenue during this period was 445.8 billion yuan (about 9 trillion yen), with a profit margin of 6.1%, but some said that net profit was down 40%. has also been pointed out.

Huawei Announces Business Results for the First Three Quarters of 2022 - Huawei

Huawei Profit Falls in Year Without Phone Cash Cow - Bloomberg

Left to its own devices: Huawei says its decline 'slowing' • The Register

The United States, one of Huawei's major markets, has long imposed strong sanctions on Huawei, and the US government has enacted laws to eliminate domestic Huawei terminals. Due to these sanctions, in the first quarter of 2019, Huawei's smartphone business, which was once close to the top Samsung, was sluggish, such as placing it in second place in the ranking of smartphone shipments, surpassing Apple.

Huawei has not disclosed financial details, but according to Bloomberg calculations, Huawei's net profit from January to September 2022 was 27.2 billion yuan (about 550 billion yen), compared to 46.5 billion yuan in the same period last year. It is said that it has decreased by about 40% from the yuan (about 940 billion yen). Bloomberg said, ``Huawei was unable to revive the smartphone business, which is a money tree, and spent a lot of money on research and development, which reduced its net profit.'' According to The Register, Huawei spent 142 billion yuan (about 2.88 trillion yen) as research and development expenses in 2021.

A series of sanctions that began during the Donald Trump administration has hit Huawei's supply chain hard. As a result of this, Huawei was forced to change the design of the flagship model 'Huawei P50' series, and was reportedly forced to sell without 5G connectivity. Although it is still in the draft stage, the United States is reportedly trying to ban new sales of Huawei communication terminals in the country, which could seriously damage Huawei's business.

Eric Xu, Rotating CEO of Huawei, said at the earnings announcement, 'Overall performance was as expected. The decline in the device business continued to slow down, and the ICT infrastructure business maintained steady growth. Going forward, By bringing in first-class talent and investing in research and development, we will raise the competitiveness of our products to a new level.'

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