Performance growth slows down and Huawei moves forward with heavy load

After a year of being stuck in the neck, Huawei released its highly watched financial report for 2020 on March 31. In terms of the annual performance, the growth rate slowed down and basically realized the business expectation. However, we need to be vigilant that the sales volume of Huawei’s mobile phones did decrease significantly compared with last year. As the supply situation is not clear, 2021 is still a difficult year for Huawei. In this environment, Huawei needs to invest more energy and capital in other businesses to make up for the part of revenue that is missing from the mobile phone business.

业绩增速放缓 华为负重前行

Continuous R & D investment

According to the financial report, the growth rate of Huawei’s performance slowed down in 2020, but it basically realized its operating expectations, with sales revenue of 891.4 billion yuan, a year-on-year increase of 3.8%; net profit of 64.6 billion yuan, a year-on-year increase of 3.2%; cash flow from operating activities of 35.2 billion yuan, a year-on-year decrease of 61.5%.

Specific to the major business sectors, Huawei’s operator business income was 302.6 billion yuan, up 0.2% year on year; enterprise business income was 100.3 billion yuan, up 23% year on year; consumer business income was 482.9 billion yuan, up 3.3% year on year.

Specific to the major regions, in addition to the growth of China, other regions have declined to varying degrees. China’s revenue was 584.9 billion yuan, a year-on-year increase of 15.4%, accounting for 65% of the world’s revenue, the highest proportion; Europe, the Middle East and Africa’s revenue was 180.8 billion yuan, a year-on-year decrease of 12.2%; Asia Pacific’s revenue was 64.4 billion yuan, a year-on-year decrease of 8.7%; America’s revenue was 39.6 billion yuan, a year-on-year decrease of 24.5%.

“In 2020, the growth rate of Huawei’s performance has indeed slowed down. Behind the slowdown, we can see that the US crackdown has a great impact on Huawei’s business, especially the consumer business. Under such circumstances, we have still achieved a small growth, on the one hand, because of our efforts to actively take measures to diversify our supply, which provides a guarantee for the company to maintain supply; on the other hand, we still insist on continuous R & D investment, and the R & D investment of Huawei will still achieve more than 15% in 2020. Of course, there is also the support of consumers and partners. ” Hu houkun, Huawei’s rotating chairman, said.

According to the financial report, in 2020, Huawei’s total R & D expenditure was 141.893 billion yuan, a further increase compared with the previous year. In the past decade, the accumulated R & D investment exceeded 720 billion yuan, and there were about 105000 R & D personnel in the world, accounting for 53.4% of the total number of the company.

Enough chips

With limited chips, Huawei’s mobile phone shipments fell sharply last year. According to the quarterly report of global mobile phone manufacturers released by IDC, in the fourth quarter of 2020, Apple’s mobile phone has changed its downward trend, with its shipment volume reaching 90.1 million units, an increase of 22.2% over the same period of last year and a market share of 23.4%, returning to the first place; Samsung’s shipment volume of 73.9 million units ranks second, an increase of 6.2% over the same period of last year and a market share of 19.1%; while Huawei’s shipment volume is restricted by the US ban As a result, the shipment volume dropped 42.4% to 32.3 million units, ranking fifth in the world, with a market share of 8.4%. In the annual sales ranking, Huawei also dropped to the third place with 189 million units.

Huawei had to sell glory to reduce losses. The annual report disclosed Huawei’s progress in selling glory. At present, Huawei has received a deposit of 10 billion yuan from the buyer of glory. The original 100% equity of glory Terminal Co., Ltd. was changed to Shenzhen Zhixin on November 17, 2020. Affected by the epidemic situation, the delivery of relevant assets will be completed no later than June 30, 2021.

However, Hu houkun said that although the mobile phone business of terminals declined, other 1 + 8 + N devices grew. As of December 31 last year, Huawei had more than 1 billion global terminal connections and 730 million mobile phone users in stock.

In 2021, Huawei’s mobile phone business is still facing great challenges. “This year’s supply situation is still not very clear, it’s not good to predict the change of the mobile phone business itself, but the planned flagship model will be launched according to the original plan.” Hu houkun said.

In terms of chips, Hu houkun revealed that Huawei had made some reserves to meet 2B’s customers’ needs. Ultimately, the improvement of global chip supply depends on the repair of global semiconductor supply chain. Huawei chips will still adopt the mode of cooperation and opening up, and will not involve chip manufacturing.

In the view of industry observer Hong Shibin, whether in the long run or at present, Huawei cannot be separated from the support of the global supply chain. At the same time, Huawei should take the mode of integration of design, manufacturing and brand, and seek to master the whole industrial ecology.

In addition to consumer business, it can be seen from the financial report that the business of operators has almost no growth. Ma Jihua, a communications expert, believes that the business of operators is mainly affected by two aspects. One is that some European operators exclude Huawei, and the other is that 5g construction slows down in the case of epidemic prevention in various countries. Fortunately, China’s construction investment is large.

Automobile and Hongmeng

The mobile phone business is in crisis, and Huawei’s other businesses still have great development potential. For example, it can be seen from the financial report data that Huawei’s enterprise business has developed rapidly and the growth rate is the largest.

On the planning and development of Huawei’s intelligent vehicles, Hu houkun told Beijing Business Daily: “at present, automobile is a hot topic. As an ICT industry, Huawei will be a bit out of date if it does not involve automobile. The automobile industry has come to the time point of digital transformation like other industries. The future development direction of automobile must be electric and intelligent, and this trend will not change. ”In addition, Huawei launched its smart car strategy a few years ago, positioning itself as a supplier of smart car components to help car companies build “good” cars, including Internet of vehicles, car voice, intelligent cockpit, automatic driving and intelligent power system. At present, this positioning has not changed.

Ma Jihua pointed out that the development of intelligent vehicles is very fast. Huawei has cooperated with many automobile enterprises, and the technology and related services will be greatly increased. With the expansion of 5g network coverage, the enterprise business still has relatively large development opportunities.

In addition, Hu houkun also revealed the development of Hongmeng system. At present, harmony OS has attracted more than 20 hardware manufacturers and 280 application manufacturers to participate in the ecological construction. The next step is to launch Hongmeng operating system on mobile phones. “In 2020, HMS has become the third largest mobile application ecosystem in the world. By the end of 2020, there will be 2.3 million registered developers in the world, including 300000 overseas and more than 120000 expanded applications.”

Liang Hua, chairman of Huawei, said that despite many uncertainties, Huawei will adhere to open cooperation and global operation, join hands with global partners to build an open ecology, promote technological progress and industrial development, and create greater value for global customers and society.

Beijing Business Daily reporter Shi Feiyue

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