Huawei H1 profit drop quickens to 36pc on rising costs, R&D spending

China's Huawei Technologies reported a 36 percent plunge in first-half net profit on Monday as soaring input costs and heavier spending on research and development outweighed revenue growth.

The Chinese technology company said net profit for January to June fell to 23.81 billion yuan (HK$27.78 billion), accelerating from a 32 percent drop in the same period a year earlier, while revenue rose 9.6 percent to 467.82 billion yuan, as it continued to recover from US sanctions.

The results underscore the cost of Huawei's push to reduce reliance on foreign technology and expand its AI computing and chip capabilities after years of US export restrictions. Rising memory chip prices have also weighed on profitability at its consumer business division, which includes smartphones.

Huawei said research and development spending rose 25 percent to 121.38 billion yuan, equivalent to 25.9 percent of revenue, as it stepped up investment in AI, communications technology, smart devices and intelligent automotive solutions.

The company said its first-half results were in line with its forecasts, but its full-year outlook remained under review because of external uncertainty and higher input costs.

Huawei, whose business includes smartphones, AI chips and telecoms equipment, did not provide a breakdown of revenue by business segment. It said all of its businesses recorded year-on-year revenue growth in the first half.

The company has made a strong revenue recovery since US sanctions and export controls restricted its access to advanced chips and Google's Android operating system, contributing to a 29 percent fall in annual revenue in 2021.

Huawei, one of the Chinese technology groups most heavily affected by US curbs, has since poured investment into developing domestic alternatives in chips, software and AI computing infrastructure. Its 2025 revenue rose 2.2 percent to 880.9 billion yuan, its second-highest annual total after a record 891 billion yuan in 2020.

This year, Huawei has promoted AI-focused telecoms products, new computing hardware and smart-driving technology, while launching new smartphones, tablets and wearable devices in China and overseas.

Increased R&D and changes in the company's business mix also weighed on profitability, Huawei said.

Reuters

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