SHANGHAI: Chinese telecom giant Huawei said on Wednesday it achieved the latest in a string of record profits last year, but revenue growth slowed sharply because of the pandemic and tightening US pressure that has pushed it into new business lines to survive.

Unlisted Huawei said net profit rose 3.2 percent to 64.6 billion yuan ($9.9 billion) last year, while revenue inched 3.8 percent higher to 891.4 billion yuan.

The world’s leading supplier of telecom networking gear and a top smart phone brand, Huawei faces uncertainty since the administration of former president Donald Trump launched a campaign in 2018 to contain the company.

The American pressure has taken time to impact the bottom line, but the results unveiled on Wednesday clearly showed that they were biting.

Bloomberg News said its calculations showed that Huawei’s revenue in the fourth quarter of last year shrank for the first time on record.

Before the US campaign began, revenue growth was routinely in excess of 30 percent. It slowed to around 19 percent in 2019.

“It’s fair to say that in 2020 we saw a slowdown in the growth rate and yes, life was not easy for us,” chairman Ken Hu said during a briefing at Huawei’s sprawling campus in the southern city of Shenzhen.

The earnings report also indicated that Huawei may increasingly find its fortunes tied to the huge China market as overseas pressure mounts.

While revenue in China grew 15.4 percent last year, it dropped 24.2 percent in the US market, 12.2 percent in Europe, Middle East and Africa, and 8.7 percent in the Asia-Pacific region.

Smart phone sales also have stalled after the US cut Huawei off from key components and banned it from using Google’s Android services.

Huawei said the unit that makes smart phones and other personal devices, and which accounts for more than 50 percent of overall revenue, managed just 3.3 percent sales growth last year.

Data released previously by independent sector analysts has shown that both domestic and overseas Huawei phone shipments plunged more than 40 percent in the fourth quarter of 2020.

‘Unfair pressure’

Ken Hu, the Huawei chairman, blamed the “unfair” US pressure. “The US restrictions have impacted our consumer business, especially our mobile phone business, leading to the moderate growth rate we achieved last year,” he said.

Washington’s allies have responded to warnings of a Huawei security threat by banning its networking equipment from their telecom systems.

Revenue growth in Huawei’s carrier network division was flat last year, just 0.2 percent.

The United States, locked in a worsening rivalry with China, fears Beijing could utilise Huawei systems installed around the world for espionage.

China’s government and Huawei have heatedly rejected the suggestion.

Published in Dawn, April 1st, 2021