Huawei says it has come out of “crisis mode” due to US sanctions

Huawei says it has come out of “crisis mode” due to US sanctions: business stabilizes, but hardly any profit

Eric Xu, president of Huawei, wrote in the company’s year-end letter to its employees, reports The Wall Street Journal:

US sanctions are now our new normal, and we’re back in business as usual.

Huawei has come out of “crisis mode” due to US sanctions. According to the company, its telecommunications business has stabilized and it reported stable profits in 2022.

In his New Year message, Xu says that Huawei expects to end the year with profit of 636.5 billion yuan, about $91.5 billion, virtually unchanged from the previous year.

Most importantly, Xu continues, its telecom infrastructure business grew in 2022, and the decline of its once-dominant mobile device business has leveled off. Reuters cites a paltry growth in sales of 0.02%.

However, in his letter, Xu does not talk about Huawei’s profitability. Usually the company presents its annual financial results in the first quarter of the following year, that is to say that these figures will be known in the first months of 2023.

At its market high, Huawei posted record profits of $122 billion in 2019, and in 2020 briefly crowned itself the world’s largest smartphone maker.

In contrast to Xu’s statements, Counterpoint reports that Huawei has run out of inventory of self-developed HiSilicon chipsets. Following the US trade ban in 2019 and multiple extensions, Huawei had an opportunity to secure chipset manufacturing from TSMC. However, in 2020 it assured that it would abide by US restrictions and stopped manufacturing Huawei processors altogether.

Despite this, Huawei is allowed to use Qualcomm chipsets, but on the condition that it limits its connectivity to 4G, a detail that puts it at a disadvantage compared to current market competitors.

Director Xu finalized his message to employees that 2023 will be a pivotal year for Huawei, prioritizing major R&D investments and finding new business opportunities in the telecom equipment segment.