Source: Visual China

Huawei was recently said to consider a split-up of its consumer business, probably resulting in investment in mobile reduced this year if the business is sold off, and some of relevant R&D teams may merge with Honor, a former Huawei smartphone brand that was spun off due to the U.S. sanctions in2020. This is false news since Huawei will still ramp up input in mobile and keep building its premium brand, an insider told 21st Century Business Herald, a Chinese business newspaper. The person added that the company would launch new flagship mobile this month.

Huawei continues to develop high-end mobile business with news launches despite the ongoing U.S. sanctions and national security concerns overseas. The Shenzhen-based tech giant announced last April to rename its consumer business group as terminal business group, marking an initial foray into the commercial sector. Besides to provide products targeting retail consumers, the terminal business also focuses on the government and business customers, further exploring commercial offerings, especially in forms of B2B (business-to-business) transaction. Seven months later, it rolled out new foldable mobile Pocket S, with the same form of P50 Pocket, its first clamshell foldable in late 2021.

Huawei released in August revenue of RMB301.6 billion (US$44.7 billion) in the first half of 2022, representing a 5.9% year-over-year (YoY) fall amid U.S. restrictions on its access to chips since 2020. Its net profit margin in the six months declined to 5.0%, almost half of margin in the same period a year ago. The founder and CEO Ren Zhengfei the same month cautioned shocks including global recession and urged to turn into a survival mode with a focus transition to profitability and cash flow. The coming decade would be very painful as the global economic recession lasts and no improvement could see in upcoming three to five years owing to Russia’s war in Ukraine and U.S. restrictions on Huawei, Ren expected, in an article titled “Operating Principle of the Whole Company Shall Turned to Seek Profit and Cash Flow, Instead of the Scale”.

Revenue of the year 2022 is expected to be RMB636.9 billion (US$91.53 billion), roughly flat compared with the previous year’s RMB636.8 bilion, Eric Xu, Huawei's Rotating Chairman, said in a letter to staff in late December. The revenue remained well below the company's record of $122 billion in 2019, when it at a point ranked as the No.1 mobile vendor in the world. The digital energy and cloud saw rapid growth, the ICT infrastructure maintained steady increase, while the decline of terminal business slowed down, Xu commented performance of various businesses in the year.

However, the new sanction threat seems looming. Reports in late January said the Biden administration was considering stopping granting licenses to Huawei's US suppliers, to completely cut off Huawei from importing any US products. Any disruption to purchases from the United States would take a further hit to Huawei's terminal business.

Earlier this week, Reuters reported Germany is mulling banning Huawei and its telecom peer ZTW from offering critical components of telecom networks. An interior ministry spokesperson later confirmed that the German government did have a general review of telecoms tech suppliers underway, but added this was not directed at specific manufacturers.

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