Chinese vendor Huawei’s business felt the impact of the ongoing U.S. sanctions in the first quarter of the year, with a 16.5% year-on-year decline in revenues.
In a release, Huawei reported revenues of CNY152.2 billion ($23.5 billion) in the first quarter, while its profit margin increased 3.8 percentage points to 11.1% on improvements in operations and management efficiency, along with increased patent royalty income.
The vendor didn’t reveal net profit or break out revenue by business group, but said its Consumer Business Group’s revenue was hit by offloading its Honor brand in November 2020.
“2021 will be another challenging year for us, but it’s also the year that our future development strategy will begin to take shape,” said Eric Xu, Huawei’s Rotating Chairman. ” No matter what challenges come our way, we will continue to maintain our business resilience. Not just to survive, but do so sustainably. As always, we will remain focused on the needs of our customers and keep delivering practical business value.”
Huawei also said It will continues to improve its software engineering capabilities and ramp up investment in the software sector to gradually increase the proportion of software and services in its total revenue mix.
“As always, we remain committed to technological innovation and investing heavily in R&D as we work to address supply continuity challenges caused by restrictions in the market,” said Xu.
Huawei had previously reported its sales revenues reached CNY 891.4 billion in 2020, up 3.8% year-on-year while its net profit rose 3.2% to CNY 64.6 billion. The company said that trade restrictions implemented by the U.S. government had impacted the company’s operations outside China during 2020.
In 2019, Huawei had recorded a 5.6% increase in profit and 19.1% rise in revenue.
In May 2019, the U.S. Department of Commerce added Huawei to its Entity List, a decision that effectively banned the company from buying parts and components from U.S. companies without U.S. government approval. Under the order, Huawei needs a U.S. government license to buy components from U.S. suppliers.
The U.S. government included Huawei in the Department of Commerce’s Entity List due to security concerns, as Washington believes that the Chinese government uses Huawei’s equipment for spying purposes.
Earlier this month, Xu said that Huawei was not expecting the Biden administration to remove the company from the Entity List.
“We believe that we will need to continue working and surviving while on the Entity List for a long time. We cannot develop our strategy based on wrong assumptions or unrealistic hopes. Our overall strategy and specific initiatives are all developed to ensure that we could survive and develop while remaining on the Entity List for a long time,” the executive said during a session with journalists at the Huawei Global Analyst Summit 2021.
