- The Chinese vendor has issued its annual new year message
- Company says its 2023 sales topped 700bn Chinese yuan
- That’s an increase of 10%, once again showing that the company is proving resistant to international pressures
Despite increasingly stringent US trade sanctions and unrelenting political pressure in multiple markets, Chinese telecom and enterprise technology vendor Huawei Technologies managed to increase its annual sales by about 10% in 2023, according to a new year message from current chairman Ken Hu.
The company traditionally posts a message for staff, customers and partners from the current chairman at the turn of the calendar year and in the latest reflective composition, Hu noted that the vendor has “managed to weather the storm”, is now “pretty much back on track” and expects to report full-year revenues for 2023 of more than 700bn Chinese yuan ($98.1bn). That’s a year-on-year increase of about 10% compared with the CNY642.3bn in revenues reported for 2022, though still some way off the CNY891.4bn the company reported for 2020.
The new year message doesn’t include any reference to profit margins or provide numbers for Huawei’s various operating units – those details will emerge when the company publishes its annual audited report in the springtime (usually late March or early April).
But Hu did note that the company’s ICT infrastructure business, which includes its telecom network hardware and software business lines, has “remained solid”, the digital power and cloud businesses “are growing steadily”, and that the “intelligent automotive solutions have become significantly more competitive.”
Most notably, though, Hu stated that the “results from our device business surpassed expectations.” This refers to the seemingly successful renewed focus by Huawei on its smartphone business, which was the line of business most impacted by US trade sanctions. During the course of 2023, Huawei unveiled new smartphone models, in particular the Mate 60 Pro, built around high-end Chinese chipsets, a move that sparked fury amongst US politicians that are keen to see Huawei’s international influence and power squashed – see US fury at Huawei’s handset resurgence.
The move also led research firms such as IDC to note that Apple is now facing “renewed competition” from Huawei in the large and important China market.
Now Hu is looking for Huawei to build on its 2023 advances. “Our device business needs to double down on its commitment to developing best-in-class products and building a high-end brand with a human touch. The device business should also work with partners to accelerate the development of native HarmonyOS mobile apps, achieve historical breakthroughs in the HarmonyOS ecosystem, and provide consumers with an inspired experience across all scenarios,” noted the chairman.
It will be interesting to see just how much Huawei’s focus on handsets impacted its sales in 2023 when the full numbers are reported: In 2022, Huawei’s Consumer division, which sells mobile and other end-user devices, reported an 11.9% year-on-year dip in full-year sales to CNY214.5bn, accounting for 33.6% of total revenues.
While the device business grows once again, Huawei continues to rely on its ICT infrastructure business lines, including its telecom networks products, which it calls its Carrier business. In the new year note, Hu sent a clear message to that part of the vendor’s operation that it needs to do better: “Our carrier business needs to more effectively support the business success of our customers by helping them boost data traffic, innovate new services, and drive network evolution.”
In the computing and storage sectors, the Chinese vendor sees an opportunity to capitalise on the growing demands of the AI era. “In recent times, breakthroughs in foundation models have been transforming AI from scenario-based customization at a workshop level to large-scale development and application at an industrial level. Growing adoption of foundation models will demand an incredible amount of computing power. So we need to build a leading computing backbone to help all industries thrive,” noted Hu.
But while growth opportunities exist, the Huawei management team knows it will continue to face significant pressure to its business: The potential loss of telecom infrastructure deals in Portugal and Germany in the near future are typical of the ongoing challenges faced in Europe, where European Union member states are required to conform with the European Commission’s Toolbox on 5G cybersecurity measures, which require member states to identify “high-risk” technology suppliers and “apply restrictions, including necessary exclusions, to effectively mitigate the risks for sensitive and critical assets” – see German telcos kick back at Huawei ban plan.
“We still have serious challenges ahead of us,” noted Hu. “Geopolitical and economic uncertainties abound, while technology restrictions and trade barriers continue to have an impact on the world. Together, these forces are reshaping business models and the global value chain,” he wrote.
But whatever happens on the international stage, Huawei always has its local business, which generates most of its sales: In 2022, the vendor’s domestic revenues accounted for 63% of all sales, driven by investments in 5G and fibre access networks by the three major network operators and increasing enterprise customer spending, while EMEA generated 23% of revenues, Asia-Pacific 7%, and the Americas just 5%. That domestic strength, and the sheer scale of China’s trio of telecom network operators (which always use Chinese suppliers for most of their technology needs), is enough to ensure that Huawei will continue to retain the glory of being the world’s largest telecom vendor for some time yet – see Huawei still reigns over growing telecom equipment sector.
And as ever, the new year message ended on an optimistic and encouraging note: “In the past, we didn’t give up in the face of mounting pressure, nor did we allow ourselves to get carried away in a swell of growing praise. The road ahead is still bumpy, but history favours those with firm beliefs. We need to continue to forge ahead and unite as many people as possible. Together, we can overcome any challenge. As long as we keep our feet on the ground, we will move ahead steadily towards greater success.”
- Ray Le Maistre, Editorial Director, TelecomTV
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