Huawei's 5G & Smartphone Businesses Soared Despite U.S Ban

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Huawei's revenue increased 23.2-percent year over year in the first half of 2019, as its 5G and consumer business continued to grow. In light of the recent events, the results are downright impressive. The company has reported total revenue of 401.3 billion yuan or $58.26 billion and a net profit margin of 8.7-percent.

The carrier business, which deals in networking gear, contributed 146.5 billion yuan or 20.28 billion, making up around a third of the total sales. The Chinese company has entered 50 commercial 5G deals with telecommunication carriers all over the world, despite the fact that the U.S. has warned other countries, particularly its allies, against using the manufacturer's 5G equipment.

The U.S. has accused Huawei of working at the behest of the Chinese government and says that the company can spy on other nations using its equipment. Huawei has flat out denied these allegations and while some countries such as Australia, Japan, and New Zealand have decided against procuring its hardware for the next generation of wireless connectivity, others countries such as Brazil, Myanmar, and Monaco have gone ahead with it. The UK seems to be on the fence, although mobile carriers are inclined towards the Chinese giant.

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Back in May, the U.S. added Huawei to its entity list, prompting various companies such as Google and Intel to cut ties with the company. As a result, there was a lot of uncertainty around the company's smartphone business and some reports even indicated lowering sales. However, the Trump administration's stance towards the company has softened since then.

Despite the confusion, Huawei's consumer unit, which makes smartphones, tablets, wearables, and PCs, managed to rake in revenue of 220.8 billion yuan or $32 billion in the first half of this year. 118 million smartphones were shipped in total during the time period, a 24-percent year over year increase.

According to estimates from the research firm Canalys, Huawei continued to have the lion's share of the market in the April-June quarter in its home country of China, accounting for 38.2 percent of the sales. The company scooped up the market share of its rivals such as Apple, Xiaomi, OPPO, and Vivo, all of which witnessed double-digit slumps. In fact, 64 percent of all its sales came from China, per Canalys data.

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The analyst firm believes that Huawei's growth in China was fueled by its rapid offline expansion and its strategy of getting consumers to switch from competing brands. Presumably, the growth was also boosted by the outpouring of patriotic support in the wake of the ban imposed by the U.S.  It is also worth mentioning that as a whole, the smartphone market in China is experiencing a slowdown, which makes it even more remarkable that Huawei managed to grow.

That's not to say that Huawei is sitting pretty. The U.S. has still not provided clarity regarding the whole situation and the company is still not permitted to do certain business activities. So, while the battered manufacturer is painting a rosy picture by saying everything is smooth and sound, it will be interesting to see what happens in the second half of 2019.

Huawei's chairman Liang Hua said that revenue grew fast up until May, which means that a slowdown was probably witness during June when the effect of embargo likely started kicking in. However, the company believes that since it laid a strong foundation in the first half of the year, it will continue to witness growth, although it does expect difficulties ahead, which can potentially slow down its growth rate.

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