On April 28, Huawei Investment Holdings Co. filed its 2021 first-quarter financial report with the Shanghai Clearing House, showing that it achieved operating income of 150.57 billion yuan (RMB, the same below) in the first quarter, down 16.9% year-on-year. Some analysts believe that Huawei’s performance continues to decline under the continuous blow from the United States.
This is the second consecutive quarter of negative growth in Huawei’s operating income. 2020 Q4, Huawei’s operating income was 218.247 billion yuan, down 11.4% year-on-year. Before that, Huawei achieved positive operating income growth even in the first quarter of 2020, the worst quarter of the epidemic on the mainland
In an April 28 article on the mainland’s Caixin website, the main factor behind Huawei’s negative revenue growth was the sanctions imposed by the U.S. In May and August 2020, the U.S. government escalated sanctions against Huawei, resulting in Huawei no longer being able to obtain chips from TSMC and others since September 15, 2020. Because of the chip shortage, Huawei’s cell phone business, which ranks in the top three globally, saw a decline in revenue in 2020 and was forced to sell its cell phone sub-brand, Honor, in November 2020.
Huawei’s cell phone sales began to decline in August 2020, falling from 20 percent of the global market in the second quarter of 2020 to 14 percent in the third quarter and then to 8 percent in the fourth quarter, according to market research firm Counterpoint. In March, Huawei’s share of the Chinese cell phone market had fallen to 15 percent, below Vivo’s 24 percent and OPPO’s 21 percent.
IDC data show that due to the impact of U.S. sanctions, Huawei’s flagship Mate40 series released in October 2020 has seen shipments drop by more than 60% compared to the Mate30 series in the same period in 2019 due to severe supply constraints, and series such as Enjoy and nova are also facing varying degrees of stock-outs.
The Hong Kong Economic Times reported on April 28 that according to data released earlier by Strategy Analytics, 340 million smartphones were shipped worldwide in the first quarter of this year, with Samsung, Apple and Xiaomi’s shipments growing by 32%, 44% and 80% respectively, placing them in the top three, and OPPO and vivo also achieving growth. Huawei fell out of the top five, in the report was included in the “Others” (Others) column, which means that Huawei shipped less than 20 million cell phones in the first quarter.
On April 20, Huawei consumer business CEO Yu Chengdong announced at Huawei’s flagship store in Shanghai that Huawei had started selling cars, priced between 216,800 and 246,800 yuan.
Yu admitted that after the U.S. sanctions Huawei could not supply phones in sufficient quantities, “the only thing that can make up for this lack of product supply is smart electric cars.”
In addition to electric cars, Huawei has also ventured into cloud services, enterprise business, mining and cell phone payments to survive.
Financial commentator Wen Xiaogang said this, Huawei’s cell phone and network equipment is its most profitable business, after the U.S. pinched Huawei’s cell phone chip supply, coupled with the world has abandoned Huawei’s 5G equipment, Huawei’s revenue plummeted, Huawei will slowly shrink. In order to survive, Huawei will carry out other businesses in the mainland, because Huawei has the Chinese Communist Party behind it, which field it enters which field will be encroached upon by it, and the Chinese Communist Party’s recent crackdown on Tesla, because the time is just close to the time Huawei announced the sale of cars, some commentators believe that this is the Chinese Communist Party is opening the way for Huawei’s electric cars.