Telecommunications giant posts 9.9% growth in sales in first three quarters
Published: Oct 23, 2020 12:45 PM

Huawei Photo: CFP

A rising wave of patriotism in China will help Chinese telecommunications giant Huawei survive its darkest hour amid a hegemonic US crackdown, Chinese analysts said on Friday, after the company posted slower sales and profits growth in the first three quarters.

Amid the ruthless US crackdown, Huawei's sales revenue growth in the first three quarters slowed to 9.9 percent in the first three quarters, down from a 13.1 percent increase in the first half year, the company's latest financial report said on Friday.

Huawei's sales revenue from January to September reached 671.3 billion yuan ($100.44 billion), according to its financial performance report posted on its website on Friday. Net profit growth also slowed to 8 percent from 9.2 percent in the first half of the year.

But some analysts placed Huawei's performance report in a positive light.

"The statement showed that Huawei did not fail or falter under the most ruthless US crackdown, that its growth only decelerated," said Ma Jihua, a veteran industry analyst. "This encourages its clients and the market." 

The Chinese leader in 5G wireless technology and smartphone sales said its business operations in the first three quarters "basically met expectations" and said its supply chain, production and operations have faced tremendous pressure from the disruptions caused by the COVID-19 pandemic.

The US government has since mid-September cut off chipset supplies to Huawei phones, dealing a heavy blow to the company's Kirin chips, which affects its high-end flagship smartphones.

The company, however, did not mention the US factor in its statement Friday, but said it will strive for survival and work hard to fulfill its commitment to all clients and suppliers. Huawei managed to sustain its supply by stockpiling banned items.

Jiang Junmu, chief writer at telecoms industry news website, said Huawei's sales and profits slowdown is apparently connected to the crackdown by the Trump administration, which has put great pressure on Huawei's operations. 

"It is not the darkest hour for the company yet, as the really difficult time for Huawei will come in the second half of 2021 or the first half of 2022 [when chip stocks run out]," Jiang told the Global Times on Friday.

However, Ma disagrees, saying Huawei is already at its most difficult period because the US has practically exhausted its options.

Looking forward, the company is more likely to see the curbs denying it of vital components loosened due to changes in the US political climate, and China's growing self-reliance in chipmaking.

Huawei said in the statement that it hopes to develop and deploy 5G wireless telecommunication technology in the next phase to aid its growth.

Analysts said Huawei stands to benefit from a rising wave of patriotism, as China celebrates its victory in the war against US aggression in Korea 70 years ago. Many in China see Huawei as a victim of US sanctions to choke China's technological progress.

At a ceremony on Friday, Chinese President Xi Jinping said that the Chinese people will never sit idly while China's sovereignty, security and development interests are undermined, and if such a situation occurs, "they will certainly deal with it head-on."

"Although the Huawei people I met distance the company from patriotism marketing, buying a Huawei phone is almost the same as an act of patriotism nowadays in China," Ma said.

"As patriotism rises to new heights, it will lend a much needed hand to Huawei, by greatly boosting its sales at its most difficult time," Ma told the Global Times on Friday. 

But the company has to fix supply-side issues to ensure its supply keeps up with this new demand, Ma said.
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