After a challenging year, Huawei hits record $122bn revenue for 2019

2 Jan 2020535 Views

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Despite revenue growth in 2019, Huawei chair Eric Xu told employees that 2020 is set to be a ‘difficult year’.

On Tuesday (31 December), Huawei reported that sales surged by 18pc in 2019, despite the Trump administration’s efforts to exclude Huawei from Western markets.

Throughout 2019, the Chinese technology manufacturer faced scrutiny from the US and a number of European nations due to concerns about its connections to the Chinese government.

Earlier this year, the US government placed Huawei on an entity list, banning US companies from doing business with the tech giant. In the autumn, it emerged that Huawei’s Mate 30 would launch without crucial Google apps and services due to US trade restrictions.

Meanwhile, in recent weeks, there were reports that Huawei had warned the Faroe Islands and Germany of the potential consequences these nations could face if they shut the Chinese technology giant out of their markets.

Huawei’s growth in 2019

Despite recent concerns and controversies, Huawei reported that its 2019 sales jumped to $122bn. Although this is a record figure for the company, the 18pc year-on-year revenue growth is lower than previous estimates.

According to the Financial Times, analysts attribute this growth to a rapid reconfiguration of the Chinese company’s supply chain. The business shipped 240m smartphones in 2019, which is an increase on the 206m shipped the previous year, but is below the figure that the company had initially forecasted for 2019.

As well as smartphone developments, the company also launched its new AI processor, Ascend 910, as well as an AI training cluster

Ending a statement addressing employees, Huawei chair Eric Xu wrote: “The US government’s campaign against Huawei is strategic and long-term. It’s a great opportunity for us to motivate ourselves and build up some muscle. A great opportunity for us to be more united as a team and develop the capabilities we need to better navigate future challenges.”

Looking ahead to 2020

However, Xu added that 2020 is “going to be a difficult year” for the company. He said that the company will now need to focus on building out the Huawei Mobile Services (HMS) ecosystem, which aims to offer an alternative to Google’s mobile platform.

“In the long term, the US government will continue to suppress the development of leading technology, [resulting in] a challenging environment for Huawei to survive and thrive.”

Xu added that “survival is our first priority” and that 2019 was an “extraordinary” year for the company, despite “concerted efforts to keep [it] down”.

He also said that the business will keep a watchful eye on employees in 2020. “Any teams that don’t contribute to enhancing the competitiveness of operating units or improving strategic support and services will be merged or downsized. People who are made redundant during this process will be transferred to other teams to ensure focus and the company’s survival.

“We will promote those who truly help our customers succeed. At the same time, we will remove mediocre managers more quickly – people who have lost their enterprising spirit, who have built their position on personal connections or empty and unactionable reporting.”

5G infrastructure

Meanwhile, on Monday (30 December), it was announced that India, the world’s second-largest telecoms market, would allow Huawei to participate in trials of its 5G spectrum, marking a major win for the tech company.

Jay Chen, CEO of Huawei India, said: “We have our full confidence in the Modi government to drive 5G in India. Huawei is always committed to India.”

The UK and Germany, which are seen as crucial markets for Huawei, have yet to make a final decision on whether the Chinese company will be excluded from offering 5G infrastructure in their nations.

Claims of Chinese financial support

On Christmas day, The Wall Street Journal published a report that claimed Huawei had received tens of billions of dollars in financial assistance from the Chinese government to ensure that the company could undercut its competitors price points by up to 30pc.

The article said that this was “a scale of support that in key measures dwarfed what its closest tech rivals got from their governments”.

Huawei denied that it had received special treatment from China, claiming that The Wall Street Journal’s article was “based on false information”. The company added that it has invested almost $73bn in research and development over the past decade and a further $4bn into 5G between 2009 and 2019.

Kelly Earley is a journalist with Siliconrepublic.com

editorial@siliconrepublic.com