Huawei suffers a significant profit drop amid rising revenue in 2024

In 2024, Huawei Technologies, the Chinese telecom giant based in Shenzhen, experienced a notable financial shift, reporting a net profit decline of 28% compared to the previous year. The company's net profit dropped to 62.6 billion yuan (approximately $8.6 billion), a decrease from 87 billion yuan in 2023. Despite this decline in profit, Huawei’s revenue remarkably surged by 22%, reaching $118.2 billion, which was primarily driven by significant growth in its consumer goods and automotive-related sales sectors. Huawei’s management attributed the profit decline to two major factors. First, the company has been investing heavily in future-oriented technologies, focusing on research and development (R&D). The firm allocated more than a fifth of its total revenue, approximately 179.7 billion yuan (nearly $25 billion), towards R&D efforts, emphasizing a long-term strategy to enhance technological capabilities. This strategic choice reflects Huawei's commitment to innovation despite current financial pressures. Second, there were no significant gains from the sale of any of its businesses over the past year, contributing to the slide in profitability. Owing to the mounting trade tensions and restrictions imposed by the U.S., which have affected access to advanced technologies, Huawei is striving to compensate for its inhibited international business opportunities. Various Chinese tech firms, including Huawei, have been working diligently to adapt to the evolving geopolitical landscape, which has led to a more insular market for technology in China. The U.S. government has effectively barred American companies from engaging in business with Huawei, particularly restricting access to essential components, like advanced computer chips, critical software such as Google services for smartphones, and telecommunications gear sales to U.S. customers. Huawei's consumer segment, responsible for the production of smartphones and various electronic devices, showed substantial growth, reporting a remarkable 38.3% increase in revenues. Furthermore, its automotive services-related sales saw a significant increase, more than quadrupling during the same fiscal period. The company’s cloud computing division also experienced an 8.5% revenue growth, and the digital power unit recorded a 24.4% increase in sales. These developments indicate Huawei's resilience and ability to capitalize on emerging markets despite facing external challenges, reinforcing its position as one of the earliest global tech brands originating from China.