Huawei reported its first half 2023 results, announcing it had generated $42 billion (CNY310.9 billion) in revenue, with a year-on-year increase of 3.1% and a net profit margin of 15.0%.
Specifically, the company's ICT infrastructure business contributed $23 billion (CNY167.2 billion), its consumer business $14 billion (CNY103.5 billion), its cloud business $3.22 billion (CNY24.1 billion), its digital power business $3.34 billion (CNY24.2 billion) and its intelligent automotive solution (IAS) business $13.7 million (CNY1 billion).
In March, the company said it doubled down on R&D investment with an annual expenditure of $23.2 billion (CNY161.5 billion) in 2022, representing 25.1% of the company's annual revenue.
While it did not disclose specific amounts spent on R&D this quarter, Andy Purdy, Huawei’s Chief Security Officer, spoke to Silverlinings about the company earnings report and R&D goals.
“We believe that what we have done to re-prioritize our products, to just totally crazy amounts of investment in R&D, to help build on these trends with digital transformation and decarbonization, and we feel like that, by emphasizing and optimizing our processes, we have been able to set a path for ourselves, so that we can compete in a difficult, uncertain world,” he said.
Cloud market expectations
Purdy noted that the company’s cloud and digital power businesses are “intimately connected” and showing “strong growth given the challenges of our consumer business.”
“Given the progress and new launches that we've been able to do this year, and the fact that we've been able to make some progress and growth in the consumer business, is very, very heartening,” said Purdy.
“Our cloud business around the world, you know, creating access points in different places in the world is critically important,” he added. “We've created an ecosystem, for example for startups, so make it easy and for small- and medium-sized enterprises because that's where you get a lot of growth, a lot of opportunities. We want to make it really easy for those folks to get access to the latest technologies at an affordable rate.”
AI opportunities
When it comes to the second half of the year, the Chinese giant is also seeing opportunities in artificial intelligence (AI) and large language models (LLM) similar to its competitors, according to Purdy.
Specifically, Huawei Cloud has adhered to the notion of "AI for Industries,” he noted.
“Our Pangu models are large models that tackle larger challenges. Since their launch in 2021, Pangu models have been taking on the most pressing challenges in the high-value scenarios of industries,” he said. “Our focus is using AI to address our customers' top concerns in product R&D, production, supply, marketing and sales, and to unlock even greater value in sectors such as finance, manufacturing, e-government, coal mining and railway.”
Huawei Cloud has been used in more than 1,000 projects in the field of AI, 30% of which are applied to core production systems, improving profitability by 18% on average, according to information provided by a company spokesperson.
*Exchange rate at the end of June 2023: US$1 = CNY7.2543 (source: external agencies).