Huawei’s first quarter revenue ups 39% as smartphone shipments jump

Huawei Technologies, one of the world’s largest telecoms equipment vendors and a top smartphone brand, said it registered strong growth in all business segments in the first three months this year as it recorded a sharp increase in smartphone shipments.

Huawei generated revenue of 179.7 billion yuan (US$26.8 billion), an increase of 39% year-on-year, indicating resilience in the face of US pressure to curtail its participation in the rollout of global 5G network infrastructure.

Photo credit: Kārlis Dambrāns

The company’s net profit margin in the first quarter was about 8%, slightly higher than the same period last year, according to Huawei’s first quarterly release of business results ever on Monday. No revenue figures for specific business segments were announced.

In the first quarter, Huawei said it shipped 59 million smartphones. According to IDC research data, that represents growth of 50% from the 39.3 million handsets it shipped during the same period last year.

“Although we have seen fast growth for Huawei phones in all major markets, the first quarter growth is still beyond our expectations,” Zaker Li, a senior industry analyst with IHS Markit, said on Monday. “Huawei will overstep Apple in phone shipments this year and get close to market leader Samsung by the end of the year.”

Huawei wants to win 50% of the Chinese smartphone market by the end of this year, and it is on track to ship 250 million to 260 million smartphones globally this year, which would take it close to the top position, Huawei mobile chief Richard Yu Chengdong said during a conference in Shanghai in March.

Earlier this month, Huawei said it was expecting growth of at least 10% for its carrier business this year as operators and businesses alike prepare for commercialization of 5G in 2020 – after two consecutive years of flat sales.

The forecast for “double-digit growth” came after Huawei’s carrier business declined 1.3% in 2018, according to its annual report, with growth of just 2.5% in 2017 at the same business unit.

“For the industry, 5G will be the new driver for investment,” said Ken Hu, Huawei’s rotating chairman, at the Huawei Analyst Summit in Shenzhen on April 16. “5G investments this year will not be hot topic-driven but business value-driven, and these kinds of investments are more reliable and solid.”

Hu also said that the company had secured 40 contracts for 5G commercial networks around the world as of the end of March, up from 30 contracts that the company initially announced in January. A company presentation detailed that over half of these contracts come from Europe.

Fifth-generation wireless networks, which can be up to 100 times faster than 4G networks, are expected to revolutionize everything from the internet of things to autonomous driving and virtual reality, bringing billions of dollars in economic benefit to countries that can stay ahead of the pack. Huawei is currently the world’s largest telecommunications gear supplier and at the forefront of 5G innovation, with the most number of standard essential patents, according to German intellectual property analytics firm IPlytics.

Huawei’s consumer business group became the biggest contributor to a record revenue for the first time last year, reflecting the gains that Chinese smartphone brands have made both at home and abroad amid flat sales at its network equipment business.

Huawei on March 29 reported a 19.5% jump in annual revenue to 721.2 billion yuan (US$107.1 billion) in 2018. Revenue for Huawei’s carrier business reached 294 billion yuan (US$43.7 billion) – roughly the same as the previous year – as revenue at its consumer business surged 45% to 348.9 billion yuan (US$51.9 billion). Revenue at Huawei’s enterprise business rose almost 24% to 74.4 billion yuan (US$11 billion).