With U.S continuous sanctions, Huawei's annual revenue falls for the first time but profits soar

As a result of prolonged U.S sanctions, Huawei reported its first annual revenue decline on record in 2021.

However, as it concentrated on increasing profitability, the Chinese technology company's earnings soared last year.

According to Meng Wanzhou, the company's chief financial officer, “Despite a revenue decline in 2021, our ability to make a profit and generate cash flows is increasing, and we are more capable of dealing with uncertainty.”

Meng's first high-profile corporate event since returning to China from a nearly three-year extradition struggle with the U.S is Huawei's annual report, which was released Monday. Meng made her remarks at Huawei's Shenzhen headquarters during a press conference.

Huawei's revenue in 2021 was 636.8 billion Chinese yuan ($99.9 billion), down 28.5% from the previous year. Based on publicly accessible information dating back to 2002, this is the first annual revenue reduction.

The United States sanctions "supply continuity issues", and slower 5G demand in China, Meng revealed at a press conference on Monday, were all factors in the revenue drop.

Last year's net profit rose 75.9% year on year to 113.7 billion yuan.

Huawei was placed on a US blacklist known as the Entity List under former U.S President Donald Trump, preventing American companies from exporting crucial components and software to the corporation.

Huawei's access to high-end semiconductors, which are necessary for its smartphones and other gear, has been restricted by the U.S. As a result, Huawei's global smartphone market share has plummeted.

Huawei has been labeled a national security threat by the United States, which has advised other countries not to use its telecommunications equipment in next-generation 5G mobile networks. Huawei has denied that it poses a national security concern on numerous occasions.

These changes had a significant impact on the company's various business groups. In 2021, Huawei's consumer segment, which includes smartphone sales and other items, earned 243.4 billion yuan, down roughly 50% from the previous year.

The carrier division, which includes telecoms equipment sales, brought in 281.5 billion yuan in revenue, down almost 7% year on year.

A positive side for Huawei was its budding enterprise sector, which is still its smallest division but one on which the company is focusing intensively to make up for the lost time. Cloud computing is part of Huawei's enterprise division.

Huawei is significantly investing in new areas, such as the automotive industry, and hiring more scientists to focus on technology development, to counter U.S sanctions.

In 2021, Huawei spent 142.7 billion yuan on research and development, slightly more than the 141.9 billion yuan it spent in 2020.

Huawei’s rotating chairman, Guo Ping in a press statement said “Relying on talent, scientific research, and an innovative spirit, we will continuously increase investment to reshape our paradigms for fundamental theories, architecture, and software, and build our long-term competitiveness.”

Huawei is not a publicly traded corporation, but it does publish annual results that it claims are audited by KPMG.