Huawei said Friday its earnings for the first nine months of the year “met expectations,” though its revenue growth in the third quarter slowed sharply from the previous quarter.
Why it matters: The deceleration highlights how US restrictions on Huawei’s ability to source crucial high-end semiconductors have taken a toll on the Chinese telecommunication company’s business.
Details: Huawei said in a statement Friday that it booked income of RMB 671.1 billion (around $100.4 billion) in the first nine months of the year, growing 9.9% year on year.
- The company’s revenue for the third quarter was RMB 217.3 billion, a year-on-year increase of 3.7%, according to TechNode’s calculations of earlier data. The company’s second quarter revenue had rebounded to 22% compared with the same period a year earlier.
- The company’s net profit margin in the first three quarters was 8.0%, compared with 8.7% in the same period last year, according to the company’s statement disclosing unaudited financial data of the period.
- “Throughout the first three quarters of 2020, Huawei’s business results basically met expectations,” it said.
- The Shenzhen-based company said its supply chain was “under intense pressure” and its production activities and operations saw “increasing difficulties,” citing only the global outbreak of Covid-19. However, a series of sanctions imposed by the US government have cut the company off from the global semiconductor supply chain, and it is now relying on wafer stockpiles to maintain production.
- Analysts predict the company’s stockpiles of semiconductors will only last until June 2021.
Context: After three rounds of export restrictions, the Chinese telecommunications equipment and smartphone maker has lost nearly all access to semiconductors using US technology—specifically the high-end chips it needs for its carrier and handset businesses.
- In May 2019, the US government banned American companies from shipping components and technology to Huawei, but granted the company a series of reprieves, the last of which expired in August.
- In May and August, the US imposed similar export requirements on global semiconductor foundries that use American technology and third-party vendors that sell products to Huawei.
- In July, Huawei said its revenue during the first half of the year grew 13.1% to RMB 454 billion.