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Huawei posts 23% sales growth as US sanctions set to bite

Jul 30 2019 09:47
A logo sits illuminated outside the Huawei booth o

A logo sits illuminated outside the Huawei booth on day 2 of the GSMA Mobile World Congress 2019 on February 26, 2019 in Barcelona, Spain. (Photo by David Ramos/Getty Images)

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Huawei Technologies reported a 23% rise in revenue to 401.3 billion yuan ($58 billion) in the first half as the Chinese telecommunications giant withstood US efforts to curb its business.The profit margin for period was 8.7% in the six months ended June, the Shenzhen-based company said in a statement on Tuesday.

Smartphone shipments for the half jumped 24% to 118 million units.

Huawei warned that it will face difficulties in the future that could hit the pace of short-term growth. The company may be starting to feel the pinch of US restrictions on the sale of American technology that threatens to cripple its business.

It remains unable to sell certain fifth-generation wireless products to lucrative markets such as Japan, Australia and New Zealand. Revenue growth, while up from 19% in 2018, was down sharply from the 39% of the March quarter.

Executives have told staff to brace for tougher times over the remainder of 2019, people familiar with the matter have said. Huawei remains on a US blacklist that threatens to choke off the components and software needed to run its smartphone and networking businesses. Those sanctions only took effect in May and may not have been fully reflected in its bottom line.

Billionaire founder Ren Zhengfei said just last month that the sanctions would curtail its revenue by roughly $30 billion in the coming two years, wiping out its growth.

Huawei is preparing for the worst and is pulling out all the stops right now to boost sales, assigning as many as 10 000 engineers across three shifts a day to work on alternatives to American software and circuitry.

It’s said to be making adjustments to businesses most threatened by the curbs, reassigning employees from the carrier and enterprise units to the faster-growth consumer division.

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