(Aug 31): Huawei Technologies Co posted a deep profit decline after the Chinese tech champion grappled with rising memory costs and poured more resources into semiconductor research.
Net income fell 36% in the first half of this year to 23.81 billion yuan (US$3.54 billion or RM14.25 billion), while revenue rose 10% to 468 billion yuan, according to results published Monday. The company boosted its spending on research to 121 billion yuan over the same period.
Huawei derives the bulk of its revenue from telecommunication and consumer device businesses. The company is spearheading Beijing’s push for semiconductor self-sufficiency with its own chips for artificial intelligence, seeking to replace a vacuum left by Nvidia Corp’s ongoing absence in the China market.
The company has recently unveiled a technological pathway to try to overcome US-led sanctions that cut off its access to advanced semiconductors and chipmaking equipment. Its semiconductor chief He Tingbo in May said that Huawei can eventually make high-performance chips that rival the most advanced silicons made by Taiwan Semiconductor Manufacturing Co using its so-called LogicFolding technology without cutting-edge extreme ultraviolet lithography systems from ASML Holding NV.
The company went on a raw material buying spree in the first half to counter rising costs, leading to a negative cash flow of 39.9 billion yuan and a steeper decline in profits. Still, this has helped it defy a slowdown in consumer electronics demand that has weighed on major players including Apple Inc and Xiaomi Corp. Huawei has largely refrained from raising prices on its smartphones in the face of skyrocketing memory chip costs.
Huawei posted a 19% increase in smartphone sales during a mid-year promotional campaign between May and June in China, becoming the only handset maker to post growth during this period, according to research firm Counterpoint. It is now the top smartphone brand in China with a market share of over 20% after the so-called “618” shopping period, Counterpoint says.
The company is set to unveil in September a new flagship smartphone powered by its in-house Kirin chip, the first silicon made with the LogicFolding method.
Uploaded by Chng Shear Lane