Huawei's First-Half Net Profit Falls 36 Percent Due to Costs and R&D Investments
Rising input costs and intensified R&D expenditures negatively impacted the tech giant's profitability despite growth in revenues.
Chinese technology giant Huawei Technologies announced that its net profit for the January-June period decreased by 36 percent to 23.81 billion yuan. Meanwhile, company revenue rose by 9.6 percent despite rising costs and a large increase in research and development expenditures.
Decline in Net Profit Accelerates
According to data released by Huawei Technologies, the net profit decline in the first half of the year accelerated from 32 percent in the same period last year to 36 percent. During this period, net profit fell to 23.81 billion yuan.
Revenues Saw an Increase
The company's total revenue for the January-June period rose 9.6 percent to 467.82 billion yuan, as the recovery process from the effects of US sanctions continued. All business units recorded annual revenue growth in the first half of the year.
R&D Expenditures Increased by 25 Percent
With rising investments in artificial intelligence, communications technologies, and smart devices, research and development expenditures increased by 25 percent to reach 121.38 billion yuan, accounting for 25.9 percent of total revenues.
Process of Independence from Foreign Technology
These intensive expenditures and investments highlight the cost of the company's strategy to reduce its reliance on foreign technology and expand its artificial intelligence chip capabilities following US export restrictions.
Cost Pressure in the Consumer Division
In the consumer business division, which also includes smartphones, rising memory chip prices were among the main factors putting pressure on profitability.
Future Outlook Expectations
Stating that the first-half results were in line with its own forecasts, Huawei reported that the full-year outlook is still under review due to external uncertainties and high input costs.