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Huawei Technologies reported a revenue fall of 16.5% in the first quarter of this fiscal year. This dip is because of the loss of sales of its Honor range of smartphones.
Clouds on the Horizon for Huawei
Huawei reported revenues of 152.2 billion yuan ($23.46 billion) in the first quarter on Wednesday. This reflects a decrease of 16.5% as compared to the previous fiscal. However, its net profit margin rose 3.8 percentage points compared to a year earlier to 11.1%. The company said that was a result of cost cutting and royalty payments, which amounted to $600 million.
Huawei's Rotating Chairman Eric Xu said that "2021 will be a challenging year for us". Speaking in context of Huawei's future projects, he said that "it's also the year that our future development strategy will begin to take shape".
In 2019, the former US President Donald Trump put the telecom equipment and smartphone maker on an export blacklist. Trump also banned it from accessing critical technology of US origin. The move hurt its ability to design its own chips and source components from international vendors.
Most importantly, the damage the ban caused to its smartphone business is severe. Once lucrative, the same was sold to a group of agents and dealers in November. This loss of sales from Honor is a major contributor to the drop in quarterly revenue, the company said.
Apart from home market, Huawei registered losses everywhere else. The telecom giant posted a 3.2% bump in profits in 2020 in China. However, revenues were down by 12.2% to 180.8 billion yuan in Europe, the Middle East and Africa. Furthermore, revenue dropped by 8.7% to 64.4 billion yuan in the rest of Asia, and 24.5% to 39.6 billion yuan respectively from the Americas.
In other news, the company is investing heavily in businesses that are less reliant on US chip technology. These include autonomous driving technology and cloud computing.
Notably, Huawei is the largest telecom equipment maker in the world, owning a 31% market share in 2020.