America’s sanctions hit Huawei hard

The smartphone manufacturer sells much less internationally, but the Chinese hold up the rod. But how long does it work?

Huawei is suffering from the measures that Donald Trump already initiated.

Dhe sanctions of the American government against the smartphone manufacturer and network equipment supplier Huawei from China are having an effect. As the group announced in its annual report presented on Wednesday, sales in the fourth quarter of last year did not grow for the first time, but fell by 11.2 percent compared to the same period of the previous year.

Over the entire twelve months of last year, Huawei’s revenues increased slightly by 3.8 percent compared to 2019. The profit increased by 3.2 percent during this time. But when you look at the development of the individual quarters, the downward trend becomes clear: While sales rose by 23 percent in the second quarter, they only grew by 3.7 percent in the third quarter, before becoming strong in the last three months of the year shrank.

During the company’s annual press conference in Shenzhen, the current Huawei CEO Ken Hu admitted that sales of smartphones in particular had collapsed since American then President Donald Trump had banned virtually all chip manufacturers in the world from sending semiconductors to the world with effect from last September Chinese company to sell. Washington accuses Huawei of espionage on behalf of the Chinese government, which the officially privately owned company strictly denies.

Biden versus China

The year was “not easy,” said Hu, who currently holds the traditional rotating post of CEO at Huawei. Washington’s chip ban had “major consequences”. In view of the impending sanctions, the group had previously bought large quantities of semiconductors all over the world, which China cannot manufacture itself and cannot do without Huawei’s smartphones.

But because it is unclear how long stocks will last and America will maintain its sanctions, fewer and fewer people outside the country want to buy a device from Huawei. Last year sales in Europe, the Middle East and Africa collapsed by 12 percent, and in North and South America by a quarter.

In China itself, however, many often bought a Huawei smartphone out of patriotism and brought the group a sales growth of 15.4 percent. As a result, China’s once most international group is increasingly becoming a purely Chinese company, 65.5 percent of which came from its own country last year.

How things will continue with Huawei is unclear. The new American administration does not give the impression that it wants to lift the sanctions against Huawei anytime soon. President Joe Biden recently announced that he would not allow China to become “the most powerful and richest country in the world”. Huawei boss Hu did not say on Wednesday how long the company’s chip stocks would last. He also left the future of the smartphone business open, although Hu affirmed that new models would continue to be presented.