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The trade ban takes its toll — HUAWEI reveals revenue shortcoming for 2019

Huawei's 2019 sales fell about ~$12 billion short of where it wanted them to be.

Published onMarch 31, 2020

huawei logo on laptop

Huawei’s having a rough time right now. Amid the current US trade ban, it’s slowly been losing momentum in recent months. The company just released its 2019 financial report, and though HUAWEI is still quite profitable, sales numbers are not where the company would like them to be.

The annual financial report reveals that HUAWEI’s 2019 global sales came in at nearly CNY 859 billion (~$121 billion), and the company scored a net profit of almost CNY 63 billion (~$8 billion). Though that’s a 5.6% increase over 2018’s global profits, Reuters reports that this is the smallest profit increase the company has seen in three years.

HUAWEI Rotating Chairman Eric Xu told CNBC that the company had missed its own sales goals by around ~$12 billion. Though HUAWEI initially projected revenue of approximately ~$123 billion at the start of 2019, it was preparing to revise that target to ~$135 billion by April. Then the trade ban threw a wrench in the company’s target sales goals when it went into effect in May.

Huawei’s not giving up, though. The company invested more than 15% of its total revenue back into research and development, bringing last year’s total R&D spending to nearly CNY 132 billion (~$19 billion) and its decade R&D spending to more than CNY 600 billion (~$85 billion).

Read also: COVID-19 pandemic leads to 40% drop in smartphone sales

What’s particularly interesting about this report is seeing how well HUAWEI did in specific markets. The financial report shows that HUAWEI’s presence still managed to grow in America throughout 2019. The company saw a 9.6% increase in revenue in the Americas compared to a measly 0.7% increase in Europe and the Middle East and a whopping 36.2% increase in China.

Though it’s no surprise HUAWEI saw a sales increase in its home country, the current trade ban drastically affects HUAWEI’s relationship with the US and its allies. Given the circumstances, a nearly 10% revenue increase in this western market is a decent success in its own right.

On the other hand, consumers around the world didn’t feel the full weight of the sanctions the majority of the year. We expect Huawei’s 2020 sales performance to decline outside of mainland China even further as the trade ban and the current COVID-19 pandemic continue to negatively impact the company’s business.

You can read HUAWEI’s 2019 financial report in its entirety here.

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