Huawei H1 profit drop quickens to 36% on rising costs, R&D spending

Beijing, August 31 - China's Huawei Technologies announced a significant 36% decrease in first-half net profit, attributed to rising input costs and increased research and development spending. The company reported a net profit of 23.81 billion yuan ($3.54 billion) for the period between January and June, marking a sharp acceleration from the 32% decline in the same period the previous year.

Despite a 9.6% increase in revenue to 467.82 billion yuan, the profit drop highlights the impact of Huawei's efforts to minimize dependence on foreign technology. The surge in memory chip costs has particularly affected Huawei's consumer business division, which includes smartphone sales. R&D spending rose by 25% to 121.38 billion yuan, representing 25.9% of revenue as the company intensified investments in AI, communications technology, smart devices, and intelligent automotive solutions.

Huawei affirmed that its first-half results align with its forecasts, yet its full-year outlook remains subject to review due to external uncertainties and higher input costs. The company, which encompasses smartphone production, AI chips, and telecom equipment, did not allocate revenue by specific business segments, stating that all businesses experienced year-on-year growth during the first half.

Since the U.S. sanctions and export controls limited its access to advanced chips and Google's Android operating system, Huawei's revenue has rebounded robustly, recovering 29% of the losses incurred in 2021. The company has been investing heavily in domestic alternatives for chips, software, and AI computing infrastructure. In 2025, Huawei projected a revenue of 880.9 billion yuan, marking its second-highest annual total after 891 billion yuan in 2020.

This year, Huawei has been focusing on AI-powered telecom products, advanced computing hardware, and smart-driving technology, alongside launching new smartphones, tablets, and wearable devices in both domestic and international markets. The increased R&D expenditure and shifts in the company's business mix have also contributed to reduced profitability, according to Huawei.