Huawei Sales Rebound Despite U.S. Efforts to Halt Gear Deals

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Huawei Technologies Co. said sales grew even as the company faces restrictions from a number of countries on the use of its telecommunications equipment.

Revenue increased 13% to 454 billion yuan ($65 billion) in the first six months of 2020 after barely growing in the first quarter, the Shenzhen-based company said in an e-mailed statement on Monday. Huawei’s growth had evaporated in the first three months of the year amid a relentless U.S. campaign against the maker of networking equipment and as the Covid-19 pandemic decimated smartphone sales.

The White House has spearheaded a global campaign against Huawei, warning allies not to use it in their next generation 5G wireless networks because it can be influenced by the Chinese Communist Party. Huawei says it’s an independent company and denies its products pose unique risks.

Stringent U.S. sanctions have jeopardized Huawei’s supply chain, and some lawmakers in the U.S. and U.K. are calling for a full ban of the company’s equipment in national networks -- Britain’s National Security Council will meet on Tuesday to decide the Chinese company’s future involvement in national networks.

“The complex external environment makes open collaboration and trust in global value chains more important than ever,” Huawei said in the statement. “Huawei has promised to continue fulfilling its obligations to customers and suppliers, and to survive, forge ahead, and contribute to the global digital economy and technological development, no matter what future challenges the company faces.”

Huawei reported a net profit margin of 9.2% in the first half of the year, compared with 7.3% in the first quarter. Monday’s sales report showed the company’s consumer business continued to dominate, with 256 billion yuan in sales, followed by 160 billion yuan at its carriers division. Its enterprise unit accounted for the remainder of revenues.

Huawei has gained the majority of China’s 5G contracts since the government kicked off a drive this year to build out its fifth-generation wireless networks and revive a virus-stricken economy. The company is slated to become the top supplier of a wide range of 5G gear in its home country, including base stations and smartphones.

Though the company is poised to benefit from a global push toward working from home, international tensions will nevertheless feature heavily in its future.

“For Huawei, the stunning bounce back of China’s economy has been a major relief,” said Canalys analyst Ben Stanton by email. “But it faces colossal challenges going forwards amid increasing pressure from the U.S. and new potential hostility in markets like the U.K.”

©2020 Bloomberg L.P.

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