Huawei sees 29 per cent drop in 2021 sales after two years of US trade sanctions, as it moves deeper into digital services

Huawei Technologies Co expects a 28.9 per cent decline in total revenue to 634 billion yuan (US$99.4 billion) for 2021, with two years of US trade sanctions wreaking havoc with the Shenzhen-based tech giant’s lucrative smartphone business.

Huawei’s rotating chairman Guo Ping said in a new year’s message to employees on Friday that uncertainties in the business environment, the politicisation of technology and a deglobalisation trend pose major challenges for Huawei, but the company nevertheless needs to stick with its current strategy.

“2022 will come with its fair share of challenges, but we will keep working closely with our global partners to overcome the difficulties we face, improve business performance, and strengthen our foundations ... In the end we will not only survive, but do so sustainably,” said Guo.

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While the Chinese telecoms giant saw solid growth in its enterprise business and stability at the carrier business in 2021, its device segment – which includes smartphones – “expanded swiftly into new business domains”, said Guo, without elaborating or breaking down the performance of individual business groups.

Huawei, once the biggest smartphone maker in China, saw its domestic handset market share drop out of the top five in the third quarter, taking a hit after the company was cut off from access to high-end chips from the US and software such as Google Mobile Services. Washington put Huawei on the country’s Entity List in May 2019 over national security concerns, barring the telecoms giant from doing business with US firms without a licence. Huawei has consistently denied links with China’s security agencies.

Since late 2020, Huawei has made tactical moves to expand into other business areas, while working hard to stay relevant in the smartphone industry amid stiff competition from rival Chinese Android handset vendors such as Xiaomi, Oppo and Vivo. Huawei also sold its budget brand Honor to a consortium of companies, including government-backed firms, in 2020 in an effort to save the unit from US pressure.

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Its new initiatives include expanding cloud services operations in the Asia-Pacific region, helping domestic enterprises cut their carbon footprint, supplying more 5G base stations and core network gear to China’s major telecoms operators, increasing patent licensing deals and establishing partnerships for its HarmonyOS mobile platform. The latter has been used on more than 220 million devices, including smartphones and wearables, according to company data released last week.

Guo said the company will step up investment in HarmonyOS and EulerOS, another ecosystem for digital infrastructures, as well as its digital power technologies for clean energy and the digitalisation of traditional energy.

Huawei also aims to continue its involvement in the automobile industry as a provider of smart car components. This year Huawei has collaborated with Chinese carmakers including Seres and Arcfox to release new smart cars, supplying its auto partners with HarmonyOS, automotive chips, lidar sensors and technologies that allow cars to link to the internet and to each other.

“Cutting costs [alone] won’t pave the way to sustainable survival. Only through strategic investment can we grow stronger and build a future for ourselves,” said Guo.

More from South China Morning Post:

• Huawei starts to sell used smartphones, license handset designs amid its struggle with US trade sanctions
• Huawei renews effort in mobile payments amid Beijing’s moves to boost industry competition
• Huawei, Honor, Lenovo’s Motorola push new range of foldable smartphones in China
• Huawei underlines EV ambitions with plan to develop luxury SUV with Seres
• Huawei, banned from the US, teases consumers with Black Friday 100 per cent discount offer

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