Huawei today announced results showing that its growth has slowed significantly this year as the Chinese telecommunications equipment and smartphone giant said "manufacturing and operations are facing major challenges".
While Huawei didn't specify any trade restrictions in its brief announcement, the company has faced a number of trade restrictions by the U.S. government. The full impact of these guidelines has not yet been realized as the US government has granted Huawei several exemptions, including one that will delay the implementation of a trade ban with Huawei and ZTE until May 2021.
For the first three quarters of 2020, the Chinese telecommunications and smartphone giant had sales of 671.3 billion yuan (about $ 100.7 billion), an increase of 9.9% over the previous year and a profit margin of 8% corresponds. The company said those results "basically met expectations," but it was a huge drop from performance in the same period last year, when Huawei saw 24.4% growth with a 8.7% profit margin.
Huawei is a privately held company and its announcement has not broken down its results in terms of smartphone or telecom device sales or any other detail.
The company wrote: “As the world grapples with COVID-19, Huawei's global supply chain is under pressure and its manufacturing and operations are facing major challenges. The company continues to strive to find solutions, survive, move forward, and meet its commitments to customers and suppliers. "
Other US restrictions include one that bans Huawei from using US software and hardware in certain semiconductor processes, forcing it to find other sources for chips.
In addition to the US, Huawei is also being scrutinized by other countries, including the UK, which is planning to launch a new strategy preventing telecommunications from buying new 5G devices from Huawei to ZTE and requiring them to purchase parts from them remove companies already installed on UK 5G networks by 2027.
Replacing Huawei devices also poses costly challenges for telecommunications as Huawei is one of the largest providers in the world. Last month, the U.S. Federal Communications Commission announced that replacing Huawei and ZTE network equipment would cost $ 1.837 billion, with rural telecommunications networks facing the greatest financial pressure.
But 2020 had a few bright spots for Huawei. In July, a report from Canalys found that Huawei would overtake Samsung as the leading provider of smartphones worldwide in the second quarter of 2020. This is a major milestone as Apple and Samsung haven't been at the top on Canalys' cards for the first time in nine years. This was partly because smartphone shipments were generally impacted during the COVID-19 pandemic. However, Huawei was supported by sales in China, the domestic market.