China's Huawei says 2020 sales rose despite US sanctions

BEIJING (AP) — Chinese tech giant Huawei said Wednesday it eked out a gain in sales and profit last year but growth plunged after its smartphone unit was hammered by U.S. sanctions imposed in a fight with Beijing over technology and security.

China’s first global tech brand reported sales of phones, network gear and other technology rose 3.8% over 2019 to 891.4 billion yuan ($135.8 billion), a decline from the previous year’s 19.1% growth. That was propelled by a 15.4% gain in China, while sales in other markets shrank.

Huawei Technologies Ltd. is struggling to keep its global markets after then-President Donald Trump in 2019 cut off access to U.S. processor chips and other technology. Huawei was the top-selling smartphone brand in the second quarter of 2020 but fell out of the global top five after losing Google’s music and other popular services.

“We’ve held strong in the face of adversity,” chairman Ken Hu said in a statement.

The results reflect the damage from U.S. sanctions and point to a future perhaps focused on China, where sales of network and other products are less vulnerable to foreign pressure.

Huawei, which denies accusations it might aid Chinese spying, sold its lower-priced Honor smartphone brand in hopes of reviving sales by separating it from the sanctions on the parent company.

Huawei says it has a stockpile of U.S.-made chips for its high-end smartphones but executives have said those are running out. Trump expanded sanctions by barring global suppliers last year from using U.S. technology to produce chips for Huawei.

Economists and political analysts expect little change under President Joe Biden, who succeeded Trump in January.

The founder of Huawei, Ren Zhengfei, said in February he sees little chance sanctions will be lifted. Ren said the company can expand its focus on selling network technology to mining and other industries.

Huawei said 2020 profit edged up 3.2% to 64.6 billion yuan ($9.8 billion), decelerating from 2019’s 5.6% growth.

Sales growth was the weakest since a one-year contraction in the early 2000s after the tech industry was shaken by the collapse of share prices for internet companies on Wall Street, according to the company.

Sales of smartphones and other consumer products rose 3.3% over 2019 to 487 billion yuan ($74.1 billion), or 54% of total revenue. That was down from a 34% increase in 2019.

In a show of technical prowess, the company unveiled a folding smartphone in February with an eight-inch-wide (20-centimeter-wide) screen. But it said the Mate X2 will be sold only in China, possibly reflecting shortages of processor chips to manufacture it.

Even in China, sales in 2020 were hurt by the coronavirus pandemic. The 15.4% sales growth was less than half of 2019’s 36.2%.

Network equipment sales to global phone carriers were flat at 302.6 billion yuan ($46.4 billion) after Washington pressured European and other allies to exclude Huawei as they upgrade to next-generation technology.

Chinese government spokespeople accuse Washington of using phony security accusations to hurt a rising competitor.

The two governments, along with Canada, are mired in a diplomatic battle over the arrest in Vancouver of a Huawei executive who is Ren’s daughter. She is fighting extradition to the United States on charges related to possible violation of U.S. trade sanctions on Iran.

Two former Canadian diplomats were arrested in China and are being prosecuted on spying charges in what is widely seen as an attempt to pressure Prime Minister Justin Trudeau’s government to release the executive, Meng Wanzhou.

Huawei said it benefited from the trend of more people working remotely due to the pandemic. Technology sales to manufacturers, health care and other businesses jumped 23% to 103.4 billion yuan ($15.4 billion), up from 2019’s 8.6% gain.

Huawei, headquartered in the southern city of Shenzhen, says it is owned by the Chinese employees who make up half its workforce. The company began reporting financial results a decade ago in an attempt to defuse Western security concerns.

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Huawei Technologies Ltd.: www.huawei.com