#Huawei revenue rises despite #Coronavirus challenges

Huawei has reported solid sales for the first quarter of this year despite the global economic challenges posed by the coronavirus pandemic and the US all but blacklisting the Chinese company.

The world’s biggest maker of telecommunications equipment and the second-largest manufacturer of smartphones said on Tuesday that revenue was Rmb182.2 billion ($25.7bn) in the three months through March, up 1.4% from the same period a year ago even as the spread of coronavirus fuels fears of a deep global recession. Its profit margin was 7.3% compared with 8% in the same quarter a year ago.

However, Huawei Vice President Victor Zhang declined to specify the divisions that underpinned the group’s quarterly revenue and maintained a cautious outlook.  “We can see the pandemic definitely is having a big impact for the global business and is a challenge,” Zhang said.

With the coronavirus outbreak having gradually made its way around the globe after originating in January in the Chinese city of Wuhan, the extent and impact of the health pandemic will become more evident in the second quarter, Huawei said. China shut down its economy in late January after publicly acknowledging the nationwide spread of coronavirus, but the economic fallout did not fully reach the rest of the world until February and March.

Huawei has three business groups: its carrier business that works with telecommunications networks; its enterprise division; and its consumer arm, which focuses on smartphone sales. The company has signed over 90 5G commercial contracts and supplies 45 of the 70 commercial 5G networks that have launched worldwide.

But coronavirus has hit the telecoms group’s plans to roll out 5G mobile internet in Europe, leaving it increasingly dependent on its home market for sales of both telecoms infrastructure kit and smartphones. Recommended AnalysisThe Big Read Huawei: the indispensable telecoms company In May last year, Washington put Huawei on a sanctions list that banned American companies from selling to the Chinese group, and has lobbied allies including the UK and Germany to block it as a supplier for 5G networks. The company blamed the impact of the US campaign after its annual revenue last year undershot projections by $12bn.

Nevertheless, Huawei increased its spending with US suppliers by 70 per cent last year thanks to some specific licence exemptions, and its newest flagship smartphone still uses components made by American companies. The group earned 59 per cent of its revenue from China in 2019, compared with just 35 per cent in 2010. China’s largest state-owned mobile carrier, China Mobile, awarded more than 50 per cent of its contracts to build out its next-generation 5G mobile network to Huawei earlier this year.

Huawei said it is not assisting any government, including Beijing, with mobile phone contact tracing or data aggregation to help track whether users have come into contact with people infected with coronavirus. Apple and Google are collaborating to make their platforms available to governments and NGOs to conduct contact tracing during the pandemic.

“Huawei mobile services don’t have the apps that do what the Google and Apples apps propose to do,” said Zhang. “We don’t touch consumer data . . . it is not Huawei’s right to own any customers’ data.”

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