Huawei reported a significant increase in its quarterly profit, marking a continued trend of strong financial performance. The company's net profit for the December quarter was calculated at approximately ¥ 13.9 bn ($1.9 bn), an increase of over 65% from the ¥ 8.4 bn ($55.5 mn) reported in the same period the previous year. This growth is attributed to the resurgence of its consumer business, particularly against competitors such as Apple, and the expansion of its cloud division, challenging incumbents such as Alibaba.
Despite being the focus of U.S. sanctions and export controls for several years, Huawei demonstrated remarkable progress in adapting to these challenges. In August, the company announced its flagship Mate 60 smartphone series, equipped with a domestically designed and produced 7-nanometer processor. This launch spurred a wave of nationalistic support in its home market, contributing to a 17.3% surge in its consumer electronics division in 2023, with sales reaching ¥ 251.5 bn ($1.7 bn).
Huawei's resilience is seen as emblematic of China's broader effort to overcome U.S. restrictions. Following its near-exclusion from the global smartphone and chipmaking industries in 2019, the company began establishing a network of chipmaking facilities. These developments support its ambitions in sectors such as electric vehicles (EVs) and artificial intelligence (AI).
The company's cloud computing arm experienced nearly a 22% growth over the past year, as Huawei made significant inroads against domestic rivals Alibaba and Tencent. Notably, this month, Huawei implemented an AI-powered weather forecasting model in partnership with the meteorological bureau of Shenzhen, showcasing the practical applications of its technological advancements.
Additionally, Huawei's chips were integrated into the systems of Chinese AI developers, further cementing its presence in the technology sector.
While not venturing as far as Xiaomi in launching its own-brand EVs, Huawei made considerable progress in supplying technology for the automotive industry. This segment of its business expanded by 128% in 2023, with the company actively promoting Aito vehicles in its retail outlets across China.
Huawei's resurgence occurs against the backdrop of increasing governmental pressure on Apple within China, promoting the adoption of domestic technology across various industries. This policy shift coincided with a decline in iPhone shipments in China by approximately 33% in February y/y, highlighting challenges for foreign brands in the Chinese market.
However, Huawei remains cautious about the future, acknowledging the potential for volatility in the industry and the global economy in 2024. Following its advancements in semiconductor technology, U.S. officials, including Commerce Secretary Gina Raimondo, have expressed a readiness to take any necessary measures to safeguard national security. This stance suggests that Huawei may face continued or increased challenges from international policies and trade practices in the coming year.
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