(Bloomberg) -- Huawei Technologies Co. posted its first annual profit decline in more than a decade, after years of US sanctions all but obliterated its smartphone arm and compelled the Chinese telecom gear maker to ratchet up research spending.
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The Shenzhen-based company said its net income for 2022 fell almost 70% to 35.6 billion yuan ($5.2 billion), though the year-ago comparison was inflated by the sale of its youth-oriented Honor mobile unit. Yet Huawei on Friday emphasized it poured 25.1% of its 642.3 billion yuan revenue back into research. That’s among the highest ratios in the global tech industry and reflects the Chinese telecom gear maker’s sustained intent to develop alternatives to the American components and software it can no longer access.
Huawei is trying to open up new markets and businesses after US tech export restrictions gutted its smartphone business — briefly the world’s largest — and curtailed the sale of advanced gear in developed markets. Chief Financial Officer Meng Wanzhou — the daughter of Huawei founder Ren Zhengfei — joined other executives on Friday affirming the company’s intent to continue researching ways around a blockade of vital American technologies.
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The effort echoes Chinese President Xi Jinping’s calls to step up the development of China’s own technologies as the tech race against the US escalates. The Biden administration is said to be mulling a new round of sanctions against Huawei, banning all sales to the Chinese company.
“2023 will be crucial to Huawei’s sustainable survival and development,” current rotating chairman Eric Xu said in a statement. “Plum blossoms tend to grow sweeter from a harsh winter’s freeze. Today, Huawei is like a plum blossom.”
The responsibility of leading that effort will fall on Meng for much of 2023. She is slated to join the company’s roster of rotating chairpersons in April, a six-month role that will allow her to oversee Huawei’s operations for the first time. Ren, who is turning 79 in October, hasn’t announced his succession plan. On Friday, she dismissed a question about plans after ascending to her new role, saying Huawei has always been run by a “collective leadership.”