Chinese vendor Huawei ramped R&D spending and increased headcount to stabilise its business in 2022, part of efforts to return to growth in the face of sanctions, but profitability fell.

At Huawei’s earnings briefing in Shenzhen, rotating chairman Eric Xu (pictured) explained ongoing external challenges and non-market factors continued to take a toll on its operations.

He highlighted continuing efforts to expand and “optimise” Huawei’s business portfolio, which now covers a mix of ICT infrastructure, smart devices, cloud, digital power and intelligent automotive services.

Xu said “sustainable survival and development will remain a strategic focus for Huawei”.

“While we have considerable pressure ahead of us, we have what it takes to come out of the other end.”

He pointed to the importance of laying the groundwork for future development by strengthening investments, citing vast growth opportunities in a global push for digital services and green development, estimating the addressable markets will exceed $1 trillion by 2027.

Incoming rotating chair and CFO Meng Wanzhou underscored the positives, noting Huawei’s “financial position remains solid, with strong resilience and flexibility”.

She said R&D investment rose 13.2 per cent to a record-high CNY161.5 billion ($23.5 billion) in 2022, 25.1 per cent of total revenue compared with 22.4 per cent in 2021.

R&D staff increased 6.2 per cent to 114,000, more than half of its total 207,000 employees.

Numbers
Net profit fell 68.7 per cent to CNY35.6 billion, though the figure for 2021 included one-off gains from the sale of its Honor sub-brand.

Revenue was flat at CNY642.3 billion.

Its enterprise business revenue grew 30 per cent to CNY133.2 billion; carrier group was flat at CNY284 billion; and consumer declined 11.9 per cent to CNY214.5 billion.

Breaking out revenue by sector for the first time, Huawei said its cloud computing and digital power businesses grew rapidly, booking combined revenue of CNY96.1 billion and accounting for 15 per cent of its total.

Net profit margin dropped to 5.5 per cent from 17.9 per cent in 2021 and 7.3 per cent in 2020.