Huawei first-quarter profit surges 563.85%

A powerful resurgence in smartphone sales helped Huawei Technologies post a nearly sixfold increase in the Shenzhen-based tech giant’s net profit in the first quarter of the year.

Net profit leapt as much as 563.85% year on year to 19.65 billion yuan (US$2.71 billion) in the quarter to March. That compared with 2.96 billion yuan a year ago, according to figures released by the privately held company April 30.

Revenue expanded 36.66% from a year ago to 178.45 billion yuan and the firm’s spending on research and development grew 13.81% to 41.59 billion yuan during the January-March period. Every year, Huawei invests more than 10% of its sales revenue into research and development, making it one of the tech giants in the world that keep ramping up investment in research and development.

In its results filing to the National Inter bank Funding Center, Huawei did not provide a sales breakdown for various business segments. As a private, unlisted company, Huawei is therefore not subject to the same obligations as other major firms to publish detailed results.

A Huawei spokesperson was quoted by both domestic and foreign media as saying that revenue growth in the first quarter was driven by “seizing opportunities in digitalization, intelligence and decarbonization.”  

It is the strongest quarterly financial performance by Huawei in three years as rounds of sanctions imposed by the U.S. government since May 2019 has cut off its access to U.S. technology such as advanced semiconductors and crippled its once high-flying smartphone business.

But Huawei has since responded by diversifying into other fields including 5G, artificial intelligence and smart-driving technology in a bid to seek new sources of growth.

It has also found its footing by sourcing more components locally and rolled out a new high-end smartphone powered by a domestically-made chip in August last year, cementing Huawei’s role as the standard-bearer for Chinese efforts to create domestic alternatives to Western technologies.

The launch of the 5G-capable Mate 60 Pro last August sparked a spike in Huawei's smartphone sales. According to research firm Counterpoint, in the first six weeks of 2024, Huawei saw unit sales rise by 64% year on year. Meanwhile, Apple's iPhone sales in China fell 24% during the same period.  

Widely tracked data recently released by market research firm International Data Corp. showed that Huawei’s smartphone shipments in China more than doubled in the first quarter from a year ago, putting it alongside Honor, the smartphone brand spun off from Huawei in 2020, as the top smartphone sellers in China, the world’s largest smartphone market.

Huawei launched its latest flagship smartphone, the highly anticipated, high-end Pura 70 series, earlier last month. The Pura 70 line is expected to generate global shipments of around 10.4 million this year, compared with the company’s previous P60 series that only shipped 1.8 million units and the Mate 60 Pro series that sold 6.2 million in China last year, according to a report by TechInsights.

Huawei recorded its fastest growth in revenue in four years in 2023, the company said last month in its annual report, as a rebound in its core businesses in consumer electronics and cloud computing and income from new businesses like smart car components accelerated its recovery from U.S. sanctions. 

2023 also marked the third consecutive year of growth for Huawei after revenue dropped by almost a third in 2021 when the company started to exhaust chip reserves.

"We've been through a lot over the past few years. But through one challenge after another, we've managed to grow," Ken Hu, then rotating chairman, said in a press release accompanying the 2023 annual financial report.