Huawei’s profits drop 68.68% in 2022

Huawei presented its 2022 Annual Report today and also announced that Sabrina Meng will replace Eric Xu as one of the company’s rotating chairpersons. Meng, who is also known as Meng Wanzhou, is the daughter of Huawei’s founder Ren Zhengfei. She became famous (or infamous) for being held under house-arrest in Canada for a couple of years while the U.S. government demanded that she be extradited to the U.S. on charges of bank and wire fraud. Ultimately, she was allowed to return to China in September 2021, and the charges were later dropped.

Huawei has three rotating chairpersons, and Meng will share the role with Hu Houkun and Xu Zhijun, starting on April 1.

Today, outgoing Rotating Chairman Eric Xu reported net profits of 35.6 billion yuan ($5.18 billion) in 2022, a drop of 68.68% year over year compared to its 113.7 billion yuan ($16.55 billion) in net profits in 2021. Its net profit margin of 5.5% for 2022 was a low point in the company’s history.

According to the New York Times, the company blamed the drop in profits to pandemic lockdowns and an increase in R&D to counter access restrictions to U.S. technology.

"In 2022, a challenging external environment and non-market factors continued to take a toll on Huawei's operations," said Xu. "In the midst of this storm, we kept racing ahead, doing everything in our power to maintain business continuity and serve our customers."

The company reported total 2022 revenue of 642.3 billion yuan ($93.49 billion) a slight increase compared to 636.8 billion yuan ($92.69) in revenue in 2021.

"2023 will be crucial to Huawei's sustainable survival and development," Xu noted.

Huawei’s pivot to other markets

After the U.S. government began attacks on Huawei several years ago, the company responded by putting more of its focus on other markets around the world, especially in emerging economies.

Today Xu said that by 2027 Huawei estimates its addressable markets will exceed $1 trillion as countries around the world develop their digital economies. He said that with external restrictions as its new normal, Huawei will focus on “high quality.”

One indicator of Huawei’s global focus was the number of carriers exhibiting at its booth at MWC in Barcelona last month. Those carriers included:

  • Latin America - Telecom Argentina, Claro in Brasil
  • Asia Pacific - True and AIS from Thailand; HKT from Hong Kong
  • Africa - Safaricom and Ethio Telecom
  • Middle East - Zain and STC in Saudi Arabia; and Etisalat by e& in UAE
  • Europe - Telefonica 
  • Turkey - Turkcell