In a significant development that marks the impact of U.S. trade embargoes on embattled erstwhile Chinese telecommunications giant Huawei Technologies, the company reported its biggest ever drop in revenues during the first half of 2021.
On Friday, Huawei reported revenues of $49.56 billion (320.4 billion yuan); the company’s consumer business group which includes handsets, saw revenues fall by a whopping 47% to 135.7 billion yuan.
In 2019, the U.S. Administration placed Huawei on an export blacklist and barred it from accessing critical technology of U.S. origin, affecting its ability to design its chips and source components from vendors.
The move dealt a severe blow to Huawei’s handset business and saw it dropping out from the top five vendors in China, for the first time in more than seven years. In 2019, Huawei’s consumer business raked in more than 50% of the company’s revenues.
Revenue from its telecoms equipment business also declined sharply, following an increase in the number of countries opting to not purchase Huawei’s 5G solution citing increased risks of espionage.
According to an internal memo from Huawei founder and CEO Ren Zhengfei, the company is trying to pivot towards software and business areas which are not at risk of U.S. pressure.
“Our aim is to survive, and to do so sustainably,” said Eric Xu, Huawei’s rotating chairman, in a statement on the results. “We’ve set our strategic goals for the next five years.”
Following US sanctions on the company which barred Google from providing technical support to its new phone models, it started rolling out its Harmony operating system in June.
Incidentally, Huawei is seeing strong growth in its cloud services business, which has more than doubled in size in the first quarter to take a 20% market share in China, said Canalys.