Huawei’s first-half profit drops 32% as tech giant ploughs more money into R&D

Huawei Technologies saw a nearly one-third decline in profit in the first half of the year, despite reclaiming the throne in China’s smartphone market, according to a filing from its shareholding entity Huawei Investment & Holding.

Net profit during the period fell 32 per cent year on year to 37.2 billion yuan (US$5.2 billion), while revenue grew 4 per cent to 427 billion yuan, according to a filing to the Shanghai Clearing House on Friday. Privately owned Huawei regularly discloses its corporate bond issuances to the clearing institution.

Huawei did not offer any explanation for the profit decline, but said first-half expenditure for research and development (R&D) rose 9 per cent to 97 billion yuan, equal to 23 per cent of its revenue. In comparison, the company’s R&D expenditure in the same period last year was equal to 22 per cent of its revenue.

From April to June, Huawei regained top spot in the domestic smartphone market for the first time in four years, shipping 12.5 million units to capture 18 per cent market share in the period. However, its shipments were down 3.4 per cent compared with the same period in the previous year, according to market research firm IDC.

China’s smartphone market saw overall shipments drop 4 per cent to 69 million units during that period, the first contraction after six consecutive quarters of growth, IDC data showed.

“This suggests that a significant uplift in smartphone demand is unlikely in the immediate term, and the market will navigate a more complex landscape in the second half of the year,” he said.