China’s Huawei Sees Revenue Growth Level Off Despite Surge In Smartphone Sales

Huawei Technologies, the world’s largest telecommunications equipment maker, said its revenue growth rate remained unchanged at 15 per cent rise in the first-half despite record market share gains in smartphones.

Revenue was 325.7 billion yuan (US$49.05 billion) in the first six months of 2018, up from 283.1 billion yuan a year ago, the Shenzhen-based company, which does not release half-year profits, said in a statement on its website on Tuesday.

Year on year revenue growth in the first half of last year was also 15 per cent, the slowest in four years.

Operating margins improved to 14 per cent in the first six months from 11 per cent a year ago. Income was generated by Huawei’s four key business segments of carrier, enterprise, consumer, and cloud.

Huawei’s two smartphone brands – Huawei and Honor – expanded their combined market share to a record 27 per cent in the three months to June, up from 21 per cent during the same period a year ago, to mark the biggest share for any smartphone vendor in China since the second quarter of 2011, according to a recent report from market research firm Canalys.

Last week Huawei committed to increase its annual research and development (R&D) spending from a previously pledged US$10 billion to US$20 billion to between US$15 billion and US$20 billion, as the company races to become a global leader in 5G technology.

The company said it spent 89.7 billion yuan (US$13.2 billion) on R&D last year, accounting for 14.9 per cent of its total revenue.

The increased spending comes as the US, Australia and Britain push back against Huawei’s network communications technology on security grounds amid increasing international political tensions.

The US intelligence community has warned for years of Huawei’s links to the Chinese government and the People’s Liberation Army. Huawei has consistently denied any such connections, saying that it is a private company that is part-owned by its employees.

Huawei claimed recently that the US government’s “unfounded allegations” over security concerns have cost American consumers US$20 billion in lost savings from the country’s development of mobile networks because its lower cost products have been kept out of the US market.

US carrier AT&T walked away from a smartphone distribution deal with Huawei in January this year, while the Federal Communications Commission (FCC) has put Huawei and its Chinese rival ZTE Corp on a list of companies banned from selling equipment or services to US carriers under a government-subsidised programme.

The privately-owned Huawei claimed that the disclosed first half revenue data was compiled based on International Financial Reporting Standard, and has not been reviewed by its auditors. – SCMP

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