The business of the Chinese technology group Huawei continues to be sluggish against the background of harsh US sanctions. After a sharp slump in 2021, sales of the company from Shenzhen in southern China rose by 0.9 percent to 642.3 billion yuan (85.8 billion euros) last year. This emerges from the annual report presented on Friday. Profit fell by a good two-thirds year-on-year to 35.6 billion yuan.
At the presentation of the business figures, the current CEO Eric Xu was combative: This year will be crucial for the survival and development of Huawei. "While it's true that we're under a lot of pressure, we have everything it takes to get out of the other end," Xu said. According to its annual report, Huawei invested about 161.5 billion yuan in research and development last year – a sum equivalent to about 25 percent of revenue.
Biden upped the ante
The US government had imposed sanctions on Huawei in 2019 under then-President Donald Trump. The reason given was national security concerns because the network equipment supplier and smartphone provider may be cooperating with Chinese authorities and the military. Huawei has always denied the allegations.
According to press reports, US President Joe Biden is considering tightening sanctions against the company. Huawei could be denied access to semiconductors from major US suppliers such as Qualcomm or Intel. Beijing sees the sanctions as an attempt by rival US to slow down China's technological and political rise in the world.
In response to the US measures, the Group has replaced thousands of Western components and opened up new business areas in recent years. Huawei had declared the "crisis mode" to be over at the turn of the year. The US sanctions were part of the new reality, Xu stressed at the time.
"In 2022, a challenging external environment and non-market factors have further weighed on Huawei's business," Xu said. "In the midst of this storm, we have done everything in our power to maintain business continuity." Great efforts have been made "to generate a steady stream of revenue to ensure our survival and lay the foundation for future development," Xu said.
Slowed down competitor
Huawei was the second largest supplier of smartphones before the US government intervention and wanted to overtake market leader Samsung from South Korea. Among other things, the sanctions mean that the group is no longer allowed to sell devices with fast 5G data radio and Google services, which has practically thrown it out of the smartphone business internationally.
At the top of the Chinese telecommunications giant is a politically sensitive personnel change, which could have an impact on the already difficult relationship with the US. The daughter of the company's founder, CFO Meng Wanzhou, who was once targeted by the US judiciary, is to take over the rotating chairmanship of the group for the first time on Saturday (tomorrow).
The German government has also become more cautious, taking the concerns of the Office for the Protection of the Constitution and other security agencies against the Chinese telecommunications equipment suppliers Huawei and ZTE very seriously. In the second week of March, the Federal Ministry of the Interior pointed out in a letter to several companies in the industry that in the future it will not only be about testing critical components used for the first time by Huawei, but also about further use. In other words, these would have to be replaced if necessary.
Sinan Selen, Vice President of the Office for the Protection of the Constitution, recently stressed that he was satisfied that the new law on the Federal Office for Information Security (BSI) clearly states that this is not only about technical issues, but also about how strong the state influence on the respective company is.
Asked specifically about Huawei, he said: "I do not want to anticipate decision-making processes of the BSI; they look at critical components, and they come to decisions at a certain point in time X." Against the backdrop of political tensions between Beijing and Washington, China is currently trying to build a chip industry that operates largely independently of supplies from the West.