Huawei Technologies Co. has posted its first quarterly net loss in years, following a period of aggressive spending on research and development (R&D) across various sectors, including electric vehicles (EVs) and chips. Despite a 9.5% increase in revenue to approximately 276 billion yuan ($38.1 billion) in the December quarter, the Shenzhen-based tech giant’s overall business growth showed signs of slowing down.
The company’s revenue growth follows a pattern of double-digit increases in recent years, fueled in part by the rising popularity of Huawei’s Mate devices, which have increasingly outperformed Apple Inc.’s offerings in the market. However, the overall business environment has shifted, contributing to Huawei’s current challenges.
In a significant move last year, Huawei made strides in both chipmaking and smartphones, debuting its in-house operating system and launching a competitive line of AI server chips to rival Nvidia Corp. domestically. However, the company has been under pressure due to ongoing US sanctions, which have forced Huawei to ramp up its R&D efforts. This has included a focus on emerging fields, such as EV software.
For the December quarter, Huawei posted a net loss of approximately 300 million yuan, a stark contrast to the 13.9 billion yuan profit it reported in the same period last year. The previous year’s profits were bolstered by asset sales, including the sale of Honor Device Co. in 2020 and parts of its server arm in 2021. Huawei reported investing 179.7 billion yuan into R&D last year, a 9.1% increase from 2023, accounting for about 20% of its total revenue.
Despite the challenges, Huawei achieved success in certain areas. Its smart driving solutions for the automotive sector turned profitable for the first time, driven by the rapid adoption of electric vehicles in China. Revenue from this division more than quintupled, signaling strong demand for the company’s technology in the automotive market.
Huawei’s consumer business, which includes handsets, wearables, and laptops, saw significant growth of 38% in 2024. The company’s devices experienced over 20% growth in the Chinese smartphone market in the past quarter, while Apple saw a decline, according to industry consultancy IDC.
Huawei’s cloud computing division also experienced growth, with a reported 8.5% increase in 2024, fueled by the surging demand for AI-powered services across China following the introduction of DeepSeek. Huawei has capitalized on the sanctions against Nvidia, which have limited Chinese access to advanced GPUs. Chinese companies, such as Ant Group Co., which is backed by Jack Ma, have turned to locally made semiconductors, including those from Huawei, to train their AI models.
The company’s core telecom division, which remains the foundation of its global growth, grew 5% last year. However, Huawei faces increasing pressure from the United States, which is intensifying efforts to limit European carriers’ dealings with the company.
Despite the challenges, Huawei’s investments in innovation and its ability to adapt to changing market conditions suggest that the company is positioning itself for future growth, particularly in emerging sectors such as AI, electric vehicles, and cloud computing.
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