Huawei Reports Growth Despite U.S. Sanctions

Chinese tech giant Huawei reported its revenue grew 3% over the same period last year in the first half of 2023 and its profit margin increased despite U.S. and other international sanctions. Andy Purdy, Huawei chief security officer, said in an interview Friday Huawei remains open to better relations with the U.S., and blocking Huawei won’t make the U.S. safer.

The earnings release came at the end of a rocky week in U.S.-China relations. President Joe Biden signed an executive order Wednesday aimed at blocking and regulating U.S. investments in China, including computer chips, microelectronics, quantum information technologies and AI. The Chinese Foreign Affairs Ministry called the order “blatant economic coercion and technological bullying.”

Revenue rose to $43.1 billion in the six months ending June 30, Huawei said. Huawei's profit margin rose to 15%, with a net profit of $6.5 billion. Sales by its infrastructure unit were $23.2 billion, with consumer sales of $14.3 billion. Reports surfaced last month that Huawei plans to restart making advanced mobile chips as early as this year (see 2307280049).

“This is Huawei’s ‘new normal’ or regular business mode -- surviving with quality and performance in line with forecasts,” said a statement: “We have been diversifying our business and technology. This involves increasingly focusing on the digital transformation of industries and greener technology.”

Heavy investment in research and development is “key” to Huawei’s future, “to not only innovate in a competitive technology environment but to cope with sanctions,” the company said.

“It’s part of a broader issue in terms of the ability to have conversations in the United States on important issues, and China may be even worse than some of the others,” Purdy said. “There’s such a divide of the political perspectives where people will not even listen to the other side,” he said: “A lot of issues today are more complicated than people may want to think. Nuance is important.”

Huawei believes cybersecurity and privacy risks “are really important” and are “going to get more and more important as the capabilities of 5G and 6G” evolve, Purdy said. He cited the ability to connect sensors and devices, big data analytics and AI. “We’re going to be dependent on this stuff a lot more -- we have to really make sure that we can address risks in a meaningful way,” he said.

The U.S.’ main concern about Huawei is what the company “would do in the future” at the behest of the Chinese government, rather than what it has done, Purdy said. “We would devastate everything we’re doing if we did this bad stuff for China,” he said. Huawei has 114,000 employees working on R&D, Purdy said. “Huawei is trying to compete in the world” and 25% of its revenue is plowed back into R&D, he said.

“People are afraid to talk truth to power -- they’re afraid to talk about what is really in the best interests” of the U.S., Purdy said. Cutting off sales of technology to countries like China hurts the U.S. economically, he said. “You can block all the Chinese-based companies you want and you will not make America safer; you will not make the global ecosystem safer,” he said.

Purdy applauded investments in the U.S. semiconductor industry through the $52.7 billion Chips and Science Act, which passed Congress a year ago. Investment in U.S. chips capacity will be good for the country and the world, he said. But “everybody recognizes now that the chips that they produce” in the U.S. “are going to cost a whole lot more” than what’s available from Taiwan, he said.