U.S. sanctions hit Huawei's revenue drop by a third

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U.S. sanctions hit Huawei's revenue drop by a third

SHENZHEN, China - Chinese telecom giant Huawei Technologies saw its revenue drop by almost a third in the first half of 2021, with U.S. sanctions hobbling its once dominant handset business and new business areas still in their early stages

The company generated revenue of 320.4 billion yuan said on Friday.

It eked out a 0.6 percentage point rise in its net profit margin to 9.8%, largely due to efficiency improvements, a company spokesman said.

In 2019 former U.S. President Donald Trump put Huawei on the export blacklist and barred it from accessing critical technology of U.S. origin, affecting its ability to design its own chips and source components from outside vendors.

The sanctions had hobbled Huawei's handset business, with Huawei dropping out the top five vendors in China for the first time in more than seven years this year, shipping 6.4 million units according to the consultancy Canalys.

That compares to 27.4 million handsets shipped in Q2 2020 in China excluding shipments of Honor budget smartphones. Huawei is trying to pivot toward software and business areas not at risk of U.S. pressure, according to an internal memo shared by founder and CEO Ren Zhengfei with Reuters in May.

Eric Xu, Huawei's rotating chairman, has set our strategic goals for the next five years, in a statement announcing the results. In June Google started rolling out its Harmony operating system, meaning it is no longer reliant on Android for all of its operating systems.

U.S. sanctions have banned Google from providing technical support for new phones models.

First-half revenue from Huawei's enterprise business group grew 18% to 42.9 billion yuan, as the COVID - 19 outbreak spurred demand for ICT connectivity, a spokesman said.

Huawei is also seeing strong growth in its cloud services business, more than doubling in size for China in the first quarter to take 20% market share in China, according to Canalys.