Huawei’s growth slows amid trade tensions and chip shortages

31 Mar 2021

Image: © Nikolay N. Antonov/Stock.adobe.com

After another year of turbulence, the Chinese telecoms giant has seen its revenue growth slow.

With revenue up by 3.8pc in 2020, Huawei’s growth seems to be plateauing compared to the previous two years, when the company achieved year-on-year revenue growth of almost 20pc.

However, this may not come as a major surprise for the Chinese tech giant after a turbulent year that not only saw it contend with a global pandemic, but also with ongoing trade disagreements with the US.

These tensions have rumbled continuously for a number of years but the effects are beginning to be seen on the company’s balance sheet.

At the beginning of 2019, the US levied several criminal charges against the Chinese telecoms company. A few months later, Huawei was placed on the US entity list due to security concerns, which essentially barred US companies from doing business with Huawei without government approval.

Despite this, Huawei reported that its 2019 sales jumped to $122bn. At the time, however, company chair Eric Xu predicted that 2020 would be a “difficult year”.

In May 2020, the US Department of Commerce introduced further restrictions preventing foreign manufacturers of semiconductors using American technology in their operations from shipping their products to Huawei unless they get a licence from the US.

Huawei was then labelled as a ‘national security threat’ by the US Federal Communications Commission over claims about its ties to the Chinese government.

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Meanwhile, the Covid-19 pandemic and subsequent chip shortage have also been causing problems for smartphone makers including Huawei.

While the company did report a small growth in revenue in 2020, this is attributed to the company’s home market of China, with revenue declines in its other markets.

Despite this slowdown, Huawei said the results were in line with the company’s forecast. Ken Hu, the company’s rotating chair, said the company “held strong” in the face of adversity.

“We’ve kept innovating to create value for our customers, to help fight the pandemic, and to support both economic recovery and social progress around the world. We also took this opportunity to further enhance our operations, leading to a performance that was largely in line with forecast,” he said.

Additionally, it appears that Huawei has already started making plans to pivot its focus into other areas of tech.

Earlier this year, Huawei founder Ren Zhengfei spoke about plans to transfer Huawei’s 5G technologies to other devices.

“Our shipments of high-end phones have declined because of lack of chip supply. But we support the progress made by Apple’s iPhone 12,” said Ren at an event in February.

“Many high-end device users in Europe use iPhones, and the way those phones operate on our networks in Europe actually is a sign we are also doing well.”

Jenny Darmody is the deputy editor of Silicon Republic

editorial@siliconrepublic.com