Huawei’s third quarter sales increased 9.9%, but growth slowed

Huawei announced its third quarter results on October 23rd (local time). According to this, growth is slowing significantly and production and operation are facing great difficulties.

Huawei did not mention specific trade restrictions in its announcement, but it is subject to a series of export restrictions by the US government. The impact of these policies has not yet been shown in detail. This is because the U.S. government is taking some exemptions, including delaying the ban on transactions with Huawei and ZTE until May 2021.

By the third quarter of 2020, Huawei’s sales reached 6713 billion yuan, an increase of 9.9% compared to the same period last year, and the profit margin was 8%. These numbers are basically a sharp decline from the same period in 2019 when the target was achieved. Last year, Huawei achieved 24.4% growth and a margin of 8.7%.

Huawei, as a privately held company, did not disclose smartphone and communication equipment sales and other details. Huawei added that in the global fight against COVID-19, Huawei’s global supply chain is greatly affected, and production and operations are facing great difficulties.

Other U.S. government regulations include banning Huawei from providing U.S. software and hardware used in certain semiconductor processes, which forced Huawei to secure new sources of chips. In addition to the US, Huawei is receiving strict eyes from other countries such as the UK. British telecom companies are banned from purchasing new 5G equipment from Huawei and ZTE, and plan to implement a new policy requiring telecom companies to exclude Chinese companies parts already used in UK 5G networks by 2027.

Replacing Huawei equipment means increasing the cost of telecom companies. Because Huawei is one of the largest suppliers in the world. Not long ago, the U.S. Federal Communications Commission spent $1,837 billion to replace Huawei and ZTE network equipment, putting a significant financial burden on local communications networks. But for Huawei, 2020 has had some encouraging news so far. In July, it was revealed in the Canalis report that Huawei was ranked number one in smartphone shipments in the second quarter of the same year, overtaking Samsung Electronics. Huawei is the first company that has taken the top position for nine years so far, other than Apple and Samsung Electronics. This is partly because total smartphone shipments were affected by Corona 19. However, Huawei was a big help in sales in the Chinese domestic market.