Huawei profit surges as it takes share from Apple and Alibaba

Huawei sustained its run of strong quarterly profit growth, building on the resurgence of its consumer business against Apple’s iPhone and the rise of its cloud division against incumbent Alibaba.

The Chinese networking and electronics leader reported net profit of about 13.9 billion yuan (€1.8 billion) in the December quarter, based on Bloomberg calculations from its financial figures. That’s more than 65 per cent higher than the 8.4 billion yuan tally a year earlier.

The results underscore how Huawei, the target of US sanctions and export controls for years, has progressed in navigating through the challenges. In August, the company unveiled its flagship Mate 60 smartphone line-up with a domestically designed and produced seven-nanometer processor, setting off a wave of nationalistic popularity at home. Its consumer electronics division surged by 17.3 per cent in 2023, to bring in sales of 251.5 billion yuan.

Huawei, which was almost knocked out of smartphones and chipmaking after the United States cut it off from overseas suppliers in 2019, is emerging as a symbol of China’s determination to thwart Washington’s curbs. It’s now building a network of chipmaking plants to underpin its longer-term ambitions in arenas such as electric vehicles and artificial intelligence (AI).

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The company’s cloud computing arm grew by nearly 22 per cent during the year, as it made further inroads in competing with Alibaba and Tencent Holdings at home. This month, the firm deployed an AI-powered weather forecasting model with the meteorological bureau of Shenzhen, its home city. The company’s chips are also showing up in the systems of Chinese AI developers, such as the one used by the Hong Kong-based Center for Artificial Intelligence and Robotics to train an AI assistant for neurosurgeons.

While Huawei hasn’t gone as far as Xiaomi, which this week launched its first own-brand EVs, the Shenzhen company’s making progress in providing technology for the automotive sector. That business grew by 128 per cent in 2023, and Huawei has been showing off Aito vehicles in its stores in China.

Huawei’s resurgence coincides with growing pressure on Apple from the Chinese government, which is increasingly mandating or encouraging the use of home-grown devices and technology across different industries and sectors – including state enterprises. The rise of the Mate 60 has also fired up consumer enthusiasm for local brands.

iPhone shipments in China fell about 33 per cent in February from a year earlier, according to official data, extending a slump in demand for the flagship device in its most important overseas market.

But Huawei in December warned of the dangers a volatile industry and global economy will pose in 2024. In the wake of its 7nm breakthrough, officials in Washington are weighing a variety of responses from blacklisting Huawei suppliers to roping in allies to tighten an existing blockade of semiconductor technology.

Commerce secretary Gina Raimondo has said the US will “do whatever it takes” to protect its national security. – Bloomberg