Guo Ping, Huawei's rotating chairman, responded to the chip supply problem: it will actively look for systematic breakthroughs

On the afternoon of March 28, Huawei held a press conference for its 2021 annual report. At the meeting, Guo Ping, huawei's rotating chairman, and Meng Wanzhou, vice chairman and CFO of Huawei, attended the performance briefing, which was also the first public appearance of Meng Wanzhou after returning to China.

For the whole of 2021, Huawei achieved global sales revenue of 636.8 billion yuan, down 28.56% year-on-year, and net profit of 113.7 billion yuan, an increase of 75.9% year-on-year.

In the subsequent Q&A session, for the chip supply problems that the outside world is concerned about, Guo Ping said that solving the semiconductor problem is a complex and lengthy process, in the global environment, repeated technology development is not necessarily valuable, but in the case of market pattern and technology blockade, we are also happy to see more and more companies involved in actively looking for breakthroughs.

"From sand to chips, to solve the problem of the entire semiconductor, is a very complex and long investment project, need to be patient, originally some technologies do not necessarily have commercial value, but under the market division and technology blockade, technology investment has commercial value, we are happy to see more and more enterprises to join this market." In the case of advanced technology is not available, single point technology is not available, we look for a breakthrough in the system. Communication products use a multi-core structure to inject new vitality into the chip, and I believe it can increase our ability to continue to supply. Guo Ping said.

Survived the "survival" phase

After entering the LIST of US entities, Huawei still maintains the activity of various businesses, but from the perspective of impact, the impact of the "digital Berlin Wall" established by the United States on Huawei will exist for a long time.

According to the financial report data, Huawei achieved global sales revenue of 636.8 billion yuan, down 28.56% year-on-year, but the net profit achieved a year-on-year increase.

Meng Wanzhou, Chief Financial Officer of Huawei, said in a live speech: "Our scale has become smaller, but our profitability and cash flow acquisition capabilities are increasing, and the company's ability to cope with uncertainty is constantly improving. ”

Meng Wanzhou said that thanks to the improvement of the profitability of the main business, Huawei's operating cash flow has increased significantly in 2021, reaching 59.7 billion yuan, the asset-liability ratio has been reduced to 57.8%, and the resilience and flexibility of the overall financial structure are strengthening.

Even without considering the income from asset disposal, our net profit margin is still higher than that of the previous year, which is mainly due to the company's measures in several aspects, one is that we have adjusted the sales structure of our products, so that our sales rules have been better improved. On the other hand, we have better collaborative management of the entire supply plan, which also greatly improves our cycle from order to revenue. At the same time, due to Huawei's continuous technology accumulation in the ICP field, we have greatly promoted the improvement of internal operation efficiency through organized operation. Meng Wanzhou said.

Guo Ping said that Huawei still has to fight for survival, there are many difficulties to overcome, but no matter how big the difficulties are, we must unswervingly increase investment, so that we have a future.

Will actively look for chip breakthrough paths

At an employee symposium in mid-last year, Huawei said it was working with industry chain partners to solve the problems of supply continuity and competitiveness. "At present, Huawei's production is not a problem, the problem of the US card neck can finally be solved, and Huawei is solving the problem of supply continuity and competitiveness with industrial chain partners."

From the perspective of Huawei's positioning, it is still an ICT system equipment supplier, and its dependence on the entire industrial chain of chips is still very strong.

In terms of chip solutions, there have been many rumors in the past two years, but Xu Zhijun, Huawei's rotating director, has said that the current chip manufacturing is "fake news".

For the chip problem, Guo Ping said that solving the semiconductor problem is a complex and lengthy process, in the global environment, technology repeated development is not necessarily valuable, but in the case of market pattern and technology blockade, we are also happy to see more and more companies involved in actively looking for breakthroughs.

When will mobile business resume?

As one of the troika driving Huawei's growth, Huawei's consumer business has been most affected in recent years.

From the upstream chip rush to the anti-seasonal increase in order production, and then to the further penetration of omni-channel, the market space left by Huawei after being restricted is gradually being eaten by other head mobile phone manufacturers. According to data released by Omdia, Huawei's mobile phone shipments in 2021 have dropped to 35 million units, down 81.6% from 2020, while its global market share has dropped from 15% in 2020 to about 3% in 2021.

"At present, the biggest difficulty caused to us by the stage is the mobile phone business, and everyone knows that the chip of the mobile phone needs advanced technology, the volume should be small, and the power consumption should be small." Huawei can design (Kirin chips), but no one can help us make them, they are stuck, and we and our partners in the industrial chain are still tackling the problem. Huawei executives have previously told reporters that although the supply chain situation is complicated, they will not give up and will not sell the mobile phone business in the future.

In the earnings Q&A, for the development of consumer business, Guo Ping said that the United States has brought many difficulties to Huawei for many years of sanctions, the baseband chip in the mobile phone, the chip needs strong computing power and low power consumption, the demand for a small volume, Huawei still has difficulties in obtaining. "While we are actively exploring supply chain solutions with all parties, we are also looking for development opportunities in multiple new business scenarios such as wearables and PCs."

At the financial report, Huawei said that facing the future, the company will continue to increase R & D investment, in 2021 R & D investment reached 142.7 billion yuan, accounting for 22.4% of the annual revenue, the cumulative investment in research and development expenses in the past decade exceeded 845 billion yuan.

Guo Ping said that in the future, Huawei will maintain high-intensity investment in research and development, on the one hand, the optimization of system architecture, on the other hand, the exploration of robustness improvement technology, the establishment of a reliable and credible supply chain, and the continuity of the supply chain.