Huawei’s Strongest Earnings Growth Since 2019 Marks Continued Rebound in China

Huawei Technologies experienced its fastest growth in four years in 2023, driven by a resurgence in its consumer segment and revenue from emerging businesses such as smart car components, which helped propel its recovery from U.S. sanctions. The company's revenue increased by 9.63% compared to the previous year, reaching 704.2 billion yuan ($97.48 billion). Notably, the consumer business played a significant role in this growth, surging by 17.3% to 251.49 billion yuan.

Huawei's consumer segment, which includes its handset business, experienced a resurgence last year, contributing to the company's overall growth. Despite U.S. restrictions since 2019, Huawei managed to return to the mainstream 5G smartphones market with products like the Mate 60. These efforts have apparently helped the company overcome some of the challenges posed by U.S. sanctions. Last year marked Huawei's third consecutive year of growth following a significant revenue decline in 2021 when the company faced chip supply shortages. However, while the company's revenue has been steadily increasing, it remains below its peak in 2020.

Huawei's decision to forgo its traditional press conference and launch event reflects a shift in its approach, possibly indicating a desire to maintain a low profile amidst ongoing challenges. Rotating chairman Ken Hu's acknowledgment of the results being in line with forecasts suggests a cautious optimism tempered by the company's tumultuous journey. Despite facing numerous hurdles, including U.S. restrictions, Huawei has demonstrated resilience and managed to sustain growth. Meng Wangzhou's statement from a previous event, declaring Huawei's departure from crisis mode, indicates a sense of stability and confidence within the company despite external pressures.

In 2023, Huawei witnessed a remarkable increase in net profit, soaring by 144.5% to reach 87 billion yuan. This substantial growth was accompanied by a notable rise in the net profit margin, which more than doubled from the previous year to 12.35%. A portion of this profit was attributed to ongoing payments resulting from the sale of the Honor smartphone brand, which Huawei divested in November 2020, as confirmed by a company spokesperson.Furthermore, while Huawei's core ICT infrastructure business remained stable, its cloud business experienced significant growth, expanding by more than a fifth and generating revenue amounting to 55.3 billion yuan. This robust performance across various segments underscores Huawei's resilience and adaptability in navigating challenging market conditions.

Huawei's smart car software and components business, which was initiated four years ago, has witnessed remarkable growth, demonstrating a substantial increase of 128.1% year on year, reaching a revenue of 4.7 billion yuan. This growth, although from a lower comparison base, underscores the burgeoning demand and potential within the smart car industry. Recognizing the strategic importance of this sector, Huawei announced its decision last year to spin off the smart car unit into a distinct entity, highlighting its commitment to further develop and focus on smart mobility solutions.

Earlier this month, Richard Yu, the managing director and chairman of Huawei's smart car solutions, made promising projections for the unit's financial performance. Despite incurring significant losses in the past year, Yu expressed confidence that the smart car division is on track to achieve profitability starting from April. This optimistic outlook reflects Huawei's dedication to navigating the challenges of the evolving automotive landscape while capitalizing on emerging opportunities in the smart transportation sector.