TMTPOST -- Huawei Technologies reported a sharp 32 percent drop in first-half net profit as the Chinese tech giant poured record sums into research and development and booked significant asset valuation losses, even as its revenue hit near-record levels.
For the six months ending June 30, Huawei posted net profit of CNY 37.2 billion (approximately USD 5.2 billion), down from CNY 54.7 billion (USD 7.6 billion) a year earlier, according to its earnings report released on August 29. Revenue rose 4 percent year-on-year to CNY 427 billion (USD 59.9 billion), marking the company』s second-highest half-year revenue to date.
The decline in profit largely reflects Huawei』s aggressive investment in self-developed technologies. Research and development expenses climbed 9 percent to CNY 96.7 billion (USD 13.6 billion), accounting for nearly 23 percent of revenue, while overall operating costs rose to CNY 224.3 billion (USD 31.5 billion). The company also booked CNY 5.8 billion (USD 813.4 million) in asset fair value adjustments, compared with just CNY 35.3 million (USD 5 million) a year ago.
Huawei, which has operated independently from the Android ecosystem for several years, continues to prioritize homegrown technologies. Richard Yu, chairman of Huawei』s consumer business group, said the company employs more than 10,000 staff dedicated to its Harmony operating system and invests tens of billions of yuan annually in its development. Harmony 5 OS now boasts over 12 million active users.
The company』s consumer business showed signs of recovery during the quarter. Domestic smartphone shipments reached 12.5 million units, giving Huawei an 18.1 percent market share and returning it to the top spot in China for the first time in four years.
Beyond smartphones, Huawei expanded its footprint in the automotive and data center sectors. Its smart driving software has been deployed in over 900,000 vehicles, though growth remains constrained by intense price competition in the electric vehicle market and fragmented collaboration among partner brands.
Huawei also strengthened its position in cloud computing and artificial intelligence. Investments in AI and high-performance computing helped the company capture an 18 percent share of the mainland Chinese cloud market, ranking second among domestic providers.
Looking ahead, Huawei plans to ramp up investments in core technologies over the next three years, focusing on Harmony OS, Kunpeng processors, and Ascend AI chips. Sabrina Meng, rotating chairwoman, emphasized that the company will leverage its strong technical foundations to pursue opportunities in AI and other emerging sectors.
Despite the drop in profit, analysts see Huawei』s aggressive R&D strategy as a long-term strength. By prioritizing self-reliant technology development, the company aims to insulate itself from international supply chain pressures and position itself as a leader in next-generation technologies, ranging from smartphones to AI-powered enterprise solutions.
Huawei』s first-half results underscore the trade-off between short-term profitability and long-term innovation. While earnings have been squeezed, the company』s investment-heavy approach signals a continued commitment to maintaining technological independence and driving future growth across consumer, automotive, and enterprise segments.
(Note: 1 USD equals about CNY 7.25)