Huawei Reports 28% Annual Profit Drop as Money Spent on R&D

The second quarter of the current calendar year is already approaching, and the Chinese giant Huawei Technologies is only summing up the financial results of last year. Revenue growth for the period was the highest in five years and amounted to 22.4%, but the company’s net profit decreased by 28% due to increased expenses on research and development.

Image source: Huawei Technologies

The fact is that under sanctions, Huawei is forced to spend more money on developing new market segments, including the automotive one. In addition, a high base for comparison in profit a year ago was formed by proceeds from the deal to sell the Honor business, so 2024 showed a decrease in net profit by 28% to $8.63 billion. At the same time, Huawei’s revenue for 2024 increased by 22.4% to $119 billion, and a five-year maximum was reached in terms of growth rates. In terms of absolute revenue, 2024 was in second place in Huawei’s financial annals. The company’s revenue has been growing for the third year in a row after declining by almost a third in 2021 due to the US sanctions imposed at that time.

Of this amount, $47 billion came from the revenue of the consumer electronics division, which includes smartphones, laptops, and wearable devices. In fact, Huawei’s revenue in this area grew by 38% last year. The bulk of the company’s revenue was formed by telecommunications solutions and products for the corporate sector, which provided up to 5% growth in the corresponding areas, to $51 billion.

The growth leaders were the automotive electronics and software solutions segment, which added $3.6 billion in revenue, increasing the profile indicator by approximately five times compared to the previous year’s result. No less important is the fact that for the first time in Huawei’s history, the automotive business ended the year with a profit, not a loss.

Huawei’s cloud division’s revenue grew by 8.5%, and this is due not only to the emergence of DeepSeek, but also to the same American sanctions that prevent the company from developing its consumer and telecommunications businesses. At the very least, the loss of access to foreign cloud computing power by Chinese clients forces them to turn to Huawei for specialized services.

The company’s revenue in the fourth quarter of last year alone grew by 9.5% to $38.1 billion, but the company ended it with a net loss of $41.4 million. Huawei’s R&D costs for the year as a whole grew by 9.1% to $24.8 billion and in fact approached one-fifth of revenue. The company’s management also explains the decrease in net profit for the year by the growth of these expenses.