Huawei has a huge net profit
What kind of sanctions?
Since 2019, the United States has been trying to create problems for Huawei's two main areas of work: the development of new modern processors and smartphones. That same year, Google, under pressure from Trump, banned the Chinese from using its mobile services. And since almost all Huawei mobile device models of those years were based on Android, this decision immediately had a negative impact on the company's business. Users did not want to buy phones without built-in and familiar services – YouTube, Google Play, Gmail.
The development and, most importantly, the production of new processors have also come under pressure. TSMC, the largest contract chip manufacturer, has refused to cooperate with Huawei, although until 2019 the Taiwanese company was the main supplier of processors for the Chinese. Now it is allowed to conclude contracts for the production of chips using outdated technologies, but for Huawei this is not a way out, because the company needs modern technologies. No one will buy smartphones with old processors.
But that's not all – Huawei had to announce the sale of Honor, its subsidiary. It was engaged in the production of budget smartphones aimed at young consumers. In a statement, the Chinese company it was saidthat the decision “was made by Honor's industry chain to ensure its own survival” after “tremendous pressure” and “the continued unavailability of technical elements needed for our mobile phone business.” The subsidiary crossed over under the wing of the Shenzhen Zhixin New Information Technology Co. consortium, which includes more than 30 dealers and investment firms.
How Huawei responded
The only way out for the Chinese company was to develop and enhance its own products, both software and hardware. Huawei began creating its own Harmony OS platform and ecosystem for it. The developers of the Celestial Empire also created an alternative to Google services — Huawei Mobile Services.
To speed up the development process, the company used the Android software base. Harmony OS in its first version was simply a fork of the Android Open Source Project. But then Huawei gradually began to remove the Android code, creating a new version of Harmony OS – from scratch.
It was also possible to establish the production of new processors: for this, they used already purchased equipment based on American technologies. In a few years, Huawei was able to create a new toolkit for designing chips, and the Chinese SMIC began to produce them. It, in turn, achieved success – it mastered technical processes up to 5-nm. Now the contract chip manufacturer from China is working on mastering 3-nm technologies.
The new Mate and P series smartphones from Huawei received Chinese Kirin 9000 processors. This is an eight-core chipset, it is manufactured using a 5-nanometer process technology. It has 1 Cortex-A77 core at 3,130 MHz, 3 Cortex-A77 cores at 2,540 MHz and 4 Cortex-A55 cores at 2,050 MHz.
What's the bottom line?
As mentioned above, Huawei received a net profit of $7.7 billion in the first six months. Financial indicators are growing: revenue for the same period, the first half of 2024, reached $58.8 billion. This is 34.3% more than for the same period last year. Over the year, the Chinese company's net profit increased by 18.2%.
For Huawei, these are the best figures in the last few years. The company's revenue for the first half of 2019 was $56.5 billion. Also, the profit of $7.7 billion is the highest for the first half of the year in the history of the corporation. So the Chinese are clearly developing. One can only guess what they would have achieved without tough trade sanctions from the United States.
Huawei is gradually developing each of its areas of work. There are five of them in total: IT solutions, consumer business, clouds, energy, and automotive systems. According to Huawei's report, the consumer segment is currently bringing in the most profit.
A fly in the ointment
The US still has opportunities to increase pressure on Huawei. For example, imposing a ban on ASML's work on cooperation with the Chinese. Even now, the Dutch manufacturer of lithographic equipment cannot supply modern chip production systems to China. The US also achieved a ban on repairs of previously sold machines.
ASML is trying to find workarounds because China is one of the company's main partners, purchasing equipment worth billions of US dollars. And the Chinese are gradually developing their chip manufacturing tools. So sanctions no longer affect Huawei and other Chinese companies as much as they did a few years ago.
