Huawei Rings Up Improbable Comeback As Revenue Soars

Key Takeaways:

• Huawei reported its second-highest annual revenue in 2024, driven by strong sales for its smartphone and smart vehicle businesses
• The company’s HarmonyOS will be key to its overseas smartphone expansion, filling a void after Huawei was forced to abandon Google’s Android under U.S. sanctions

By Xia Fei

Once written off as a casualty of U.S. sanctions, telecoms giant Huawei Technologies is showing that notices of its death may have been premature. From regaining its crown in China’s smartphone market to taking a lead in the country’s smart car solutions, the company is defying tough odds using its own innovation and mostly homegrown Chinese technology.

The fruits of those efforts were reflected in some newly disclosed financials for 2024 given by Chairman Liang Hua at a meeting last week hosted by the Guangdong provincial government. At the meeting, Liang said Shenzhen-based Huawei generated 860 billion yuan ($118 billion) in revenue last year, up 22% year-on-year, and its second-highest total behind only the 891 billion yuan it earned in 2020.

The growth was driven mostly by a resurgence in its smartphone sales and rapid growth in its smart vehicle solutions business, Liang said, even as he described 2024 as a year “full of challenges”. He didn’t provide any details beyond the headline figure, and as a private company Huawei has always been selective about the financial information it publicly discloses.

But in an annual letter to staff last month, Yu Chengdong, chief executive of Huawei’s consumer business group, said the company’s terminal business, which includes its smartphones, “returned to the fast track of growth in 2024 after five consecutive years of sanctions.”

The rebound comes as Huawei, whose businesses range from smartphones to telecoms equipment and smart car solutions, has become a poster child for U.S. efforts to deter China’s technological rise.

The assault began in 2019, when the first administration of U.S. president Donald Trump banned U.S. government agencies from using products made by firms including Huawei, citing a national security risk. The U.S. Commerce Department later barred Huawei from obtaining American technology without government permission. Such restrictions were quickly expanded to curb Huawei’s access to semiconductor chips as well as Google’s Android operating system.

Escalating U.S. sanctions led Huawei to sell its Honor-brand smartphone business in November 2020 to ensure the budget brand’s survival without the burden of all the restrictions placed on Huawei. The company’s annual revenue tumbled to 636 billion yuan in 2021 from 891 billion in 2020 as a result, and the figure improved only modestly in 2022 and 2023 to 642 billion yuan and 704 billion yuan, respectively.

Regaining the crown

Huawei’s smartphone business was its crown jewel before the sanctions, winning the company praise both at home and abroad for its products that targeted Apple at the high end of the market. That business took the biggest hit after Huawei lost access to the high-performance chips needed for such phones, and also to the Android operating system under U.S. sanctions. But it has made a rapid comeback in the past year after finding various substitutes.

Huawei’s smartphones regained the top spot in China’s smartphone market last year with 18.1% share, the first time it returned to the top spot since the U.S. sanctions began, according to Counterpoint. Its launch of two new models, including the Mate 70 series, featuring AI capabilities and its self-developed HarmonyOS NEXT operating system, was pivotal to its growth.

Huawei also surpassed South Korea’s Samsung as the world’s best-selling foldable smartphone brand in the first quarter of 2024 with 35% of the global market versus Samsung’s 23%, according to Counterpoint. And in the first three quarters of last year, Huawei unseated Apple in the global wrist-worn wearables market, with nearly 17% share, according to IDC.

Those achievements were made possible as Huawei turned to local chipmaker SMIC to produce its proprietary high-end Kirin chipsets, after former partner TSMC was pressured by the U.S. to sever its relationship with the Chinese company.

Huawei’s younger smart car solutions business was another bright spot for the company last year. Sales under its Harmony Intelligent Mobility Alliance collaboration with several automakers surpassed 430,000 units last year, said Yu in his letter to employees. In the first half of last year, the smart car unit posted 10.4 billion yuan in revenue and a 2.2 billion yuan profit, reversing massive losses of 7.58 billion yuan in 2022 and 5.59 billion yuan in 2023.

Despite being shunned in the U.S. and many Western markets, Huawei has pivoted to selling its telecoms equipment, the company’s other major business, in developing countries, especially in Latin America.

The company remained a global leader in the telecoms equipment market, with 36.8% share in the second quarter of 2024, up 3.8 percentage points from a year earlier, according to Omdia, a market research firm. At the same time, Huawei and ZTE, another Chinese telecoms equipment maker blacklisted by the U.S, passed a major milestone by collectively controlling more than half of the global telecoms equipment market for the first time during the quarter. In contrast, European giants Ericsson and Nokia saw their share drop to 23% and 17.7%, respectively.

Rise of HarmonyOS

Another milestone for Huawei last year was the sale of more than 1 billion devices installed with its HarmonyOS operating system, up 25% year-on-year, as the operating system challenges Google’s Android and Apple’s iOS duopoly. Harmony passed iOS as the second-largest mobile operating system in China in the first quarter of 2024, Counterpoint data showed.

But doubts are emerging on whether HarmonyOS NEXT can retain its momentum. A stripped-down version of the popular WeChat app created for Harmony is getting lukewarm reviews from users in early testing. And a revival in domestic Chinese smartphone sales may be short-lived, as an initial boost in demand from a government-backed consumer goods trade-in program fades.

Meanwhile, last year’s stunning revenue growth doesn’t mean Huawei is out of the woods yet. Despite the strong top-line growth, Huawei’s profit still declined by 14% to 62.9 billion yuan in the first nine months of 2024, possibly reflecting its hefty investment in R&D.

Huawei’s next ambition is to recover ground its smartphones lost overseas after it was banned from working with Google in Android. To convince users outside China to abandon their iOS- or Android-based phones, however, could take a lot more effort, especially at a time when the global market is sluggish as users change gadgets less frequently.

Geopolitical tensions and security concerns in the West could also hinder Huawei’s ability to rebuild its global presence. The U.S may intensify efforts to further restrict Chinese access to more services and technologies under a second Trump administration as trade tensions grow. And while Huawei has shown it can bypass Washington’s technological restrictions, winning over consumers abroad with its unfamiliar HarmonyOS may take longer.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.