<Editor's Pick>Huawei maintains steadily growth despite encountering obstacles from the U.S. regulators

On March 31, after the release of the new series of mobile phones P40 and the Huawei Developer Conference, Huawei released its 2019 annual report. According to the report, Huawei's global sales revenue reached 888.8 billion yuan, a year-on-year increase of 19.1%. At the same time, its net profit was 62.7 billion yuan, and cash flow from operating activities was 91.4 billion yuan, a year-on-year increase of 22.4%.

Among them, despite encountering obstacles from the U.S. regulators, Huawei's consumer business has continued to grow steadily, with more than 240 million smartphone shipments. Consumer-centric full-scenario smart ecological layouts are further improved, such as PCs, tablets, smart wearables and smart screens, with sales revenue of 467.3 billion yuan, an increase of 34% year-on-year.

Xu Zhijun, chairman in office of Huawei, confessed at the beginning of the press conference that 2019 was a "very challenging year", but Huawei's performance "basically in line with expectations". At least it did not need to publish a "very challenging annual report".

When the epidemic gradually stabilized in China, but began to spread around the world, Xu admitted that Huawei can guarantee the product supply in the short term. However, it can't guarantee the long-term product supply for the development trend of the epidemic is unknown.

Faced with the restrictions of overseas trade, Huawei still submitted a satisfactory answer. Huawei's goal in 2020 is to "strive to survive and publish a desirable annual report next year".

Consumer business advances against the trend with revenue of 467.3 billion yuan

For Huawei, 2019 is a difficult year. On May 16, U.S. regulators included Huawei in the Entity List to restrict suppliers from supplying to Huawei. At the same time, Huawei cannot use the GMS component in Google Android system, which caused an impact on the performance of Huawei's smart devices in overseas markets.

Nevertheless, in 2019, the revenue of Huawei's consumer business still reached 467.3 billion yuan, an increase of 34% year on year, accounting for 54.4% of Huawei's annual revenue. For this achievement, Xu Zhijun said that Huawei's intelligent equipment had maintained a rapid growth overseas before May 16, at least half a year's rapid development, so it was delayed for only half a year. After May 16, Huawei's sales of smart devices fell rapidly overseas because it could not use Google's GMS system. Xu estimates that the impact of the ban on Huawei's smart device sales is at least $ 10 billion.

On March 26, Huawei launched the high-end mobile phone P40 series in Paris, which is also the first smartphone equipped with Huawei HMS system. The birth of HMS is inseparable from Huawei's investment in research and development. According to the annual report, Huawei's R&D expenses in 2019 reached 131.7 billion yuan, accounting for 15.3% of the annual sales revenue. The birth of a "hole-filling" system tool like HMS is inseparable from Huawei's R & D determination and capabilities.

A few days ago, it was reported that the U.S. city government would further restrict the supply of chip products to Huawei by American equipment manufacturers. In response, Xu Zhijun said that the "repression" of the United States will only make China's chip industry develop faster, and Huawei can choose South Korean, Japanese and domestic chips to produce smart devices. At the same time, US measures may also cause Chinese regulators to take the same countermeasures, which will actually destroy the global technology and supply ecosystem. "Once the Pandora's box is opened, the consequences are unthinkable," Xu analyzed. "The players in the global industry chain are all one, and no one can survive alone."
  
5G is still in its infancy, but it is developing rapidly

According to the report, the revenue of Huawei's traditional supplier business reached 299.6 billion yuan in 2019, a year-on-year increase of 3.8%. As a hot technology in recent years, the new 5G technology's revenue share in Huawei is not high. Xu revealed that the revenue of 5G technology is about $ 3 billion.

Similar to consumer business, due to the influence of the US government, many countries have questioned Huawei's 5G technology. Xu revealed that some of Huawei's overseas customers from 2G to 4G had not been able to reach a cooperation with Huawei on 5G technology.

3 billion US dollars is actually very small for Huawei's revenue of more than 800 billion yuan. Investigating the reason, Xu believes that 5G is currently in a period of global deployment, but the scale of 5G development will be relatively fast. For example, the three major operators in China announced their expected scale of 5G projects at the beginning of the year. Xu predicted that the final result might be higher than expected.

If 2019 is difficult, the outbreak starting in 2020 will have a huge impact on global companies. Xu admitted that 2020 could be more difficult for Huawei. On the one hand, it is the supply ban in the United States. On the other hand, due to the impact of the epidemic, the uncertainty of the global supply chain has increased greatly. Huawei's goal is to communicate with global suppliers as much as possible to ensure product manufacturing and production.

"Our goal is to strive to survive and continue to publish a desirable annual report in 2020," Xu said.

This is an article from WeChat official accounts GeekPark (ID: geekpark), translated by Chris Yuan.