Huawei First Half Net Profit Drops 36 Percent Amid Rising Costs

Huawei Technologies reported a 36 percent decline in net profit for the first half of the year, falling to 23.81 billion yuan. The company attributed the drop to soaring input costs and increased spending on research and development, which outweighed a 9.6 percent rise in revenue to 467.82 billion yuan. This profit decline represents an acceleration from the 32 percent drop recorded during the same period a year earlier.

Research and development spending rose 25.2 percent to 121.38 billion yuan, accounting for 25.9 percent of total revenue. Huawei stated these investments focused on AI, communications technology, smart devices, and intelligent vehicle solutions. The company also noted that the cost of making products rose 12.4 percent, which was a faster rate than its revenue growth. Additionally, rising memory chip prices impacted the profitability of its consumer business division.

Despite the profit drop, Huawei continues to recover from US sanctions and export restrictions that previously limited its access to advanced chips and the Android operating system. The company has invested heavily in domestic alternatives for chips, software, and AI computing infrastructure. While first half results were in line with forecasts, the company is reviewing its full year outlook due to higher input costs and external uncertainty.

Financial filings also revealed that day to day operations used 39.88 billion yuan in cash during the first half, compared to generating 31.18 billion yuan the previous year. Furthermore, the company disclosed upcoming US court dates regarding allegations of bank fraud, sanctions violations, and the theft of T Mobile trade secrets.