Except for Google, there is no opponent! Huawei invested 142.7 billion yuan in research and development last year, and Guo Ping hinted that it would not make cores

Source of this article: Times Finance Author: Xu Dan

Image source: Visual China

On March 28, Huawei held the 2021 annual report conference.

Huawei CFO Meng Wanzhou reported on the financial situation in 2021, which is also the first appearance of Meng Wanzhou since returning to China. "The last time I met you was 4 years ago, 4 years ago, the world, the motherland, Huawei has changed a lot, and I am constantly learning and trying to keep up with the changes." Meng Wanzhou said.

In 2021, Huawei achieved sales revenue of 636.8 billion yuan, down 28.6% year-on-year, and net profit of 113.7 billion yuan, an increase of 75.9% year-on-year.

Huawei's evaluation of the operating conditions in 2021 is: steady operation and investment in the future.

Huawei began to shrink its clothes and food

U.S. sanctions have had a profound impact on Huawei's various businesses, and "surviving" seems to be Huawei's biggest concern.

At the 2019 annual report press conference, Xu Zhijun, Huawei's rotating chairman, said: "In 2020, we strive to survive and release the annual report next year." Not long ago, at the financial report press conference for the first half of 2021, Xu Zhijun said: "Huawei must survive with quality." ”

Did Huawei survive? Its statement in the annual report is: In 2021, we survived, and we will continue to survive in 2022.

Huawei's way to survive is: reduce costs and increase efficiency, and save food and clothing.

In the past year, Huawei's financial management has been efficient, and while revenue has declined, net profit has also risen by 75.9%, operating cash flow has also reached 5.97 billion yuan, up 69.4% year-on-year; and asset-liability ratio has decreased by 57.8% year-on-year.

According to the annual report, the reason for the increase in net profit is: through the adjustment of sales structure, supply chain plan management to improve sales gross margin, through digital operation to improve the efficiency of internal operations, the overall sales management expenses fell significantly. Meng Wanzhou said that Huawei's sales and management expenses fell by 10 billion yuan last year.

While cutting back on food and clothing, Huawei did not save R&D expenditure, on the contrary, this year's R&D expenditure reached a new high, reaching 142.7 billion yuan, and the total R&D investment in 2012-2021 was 845.6 billion yuan.

Meng Wanzhou cited third-party report data to say that Huawei's R&D investment has ranked second in the world. Meng Wanzhou said that for Huawei, customer value gives priority to shareholder interests, R&D investment is not constrained by profits, and Huawei will continue to maintain high R&D investment in the future.

"Overall, Huawei's stable capital structure and sufficient funds in 2021 will support the company to continue to serve customers and create value." Huawei's annual report said.

What Huawei lost and gained

In terms of revenue, Huawei's carrier business achieved revenue of 281.5 billion yuan, accounting for more than 50% of overseas revenue; enterprise business achieved revenue of 102.4 billion yuan; consumer business achieved revenue of 243.4 billion yuan, of which smart wear, smart screen and other revenue increased by 30%.

Operator revenue has become Huawei's largest source of revenue, but this part is also facing huge pressure, compared with 302.6 billion yuan in 2020, this year's operator revenue has declined significantly.

The reason behind this is first of all the boycott of Huawei operator equipment in overseas markets, since 2018, in addition to the United States, Britain, France, Germany, Japan and other developed countries, the first to announce the exclusion of Huawei from the local 5G network construction, at present, including India, Brazil, Singapore and Malaysia and other developing countries, have also joined the team that excludes Huawei from the construction of 5G network equipment.

With the improvement of domestic 5G infrastructure work, Huawei's related revenue has also shown signs of slowing down. When Meng Wanzhou answered the reasons for Huawei's revenue decline, in addition to supply chain pressure, multiple rounds of US sanctions, and the impact of the epidemic, it also included that "China's 5G construction has been basically completed in 2020, and 5G deployment does not have so many customer needs."

In terms of consumer business, Huawei did not mention the mobile phone business, and Huawei's mobile phone share showed a cliff-like downward trend in the market. According to Omdia, a data research agency, huawei's mobile phone shipments in 2021 will be only 35 million, accounting for 3% of the market. In order to maintain the survival of the mobile phone business, Huawei has cooperated with China Mobile, China Unicom, China Telecom, TCL, Dingqiao Communications and other enterprises to cooperate with a number of low-end mobile phones with a price of 1500-4000 yuan, but it has not set off too much splash.

Where is Huawei's future granary?

In terms of consumer business, Huawei has set its sights on consumer health management and provided health services through wearable devices, such as the Watch D smartwatch released at the end of last year, which supports blood pressure measurement and ECG collection functions. Guo Ping, Huawei's rotating chairman, said that Huawei wearable devices have shipped more than 100 million yuan worldwide and served more than 320 million customers.

At last year's developer conference, some medical developers told Times Finance that Huawei attaches great importance to the health sector and will send R&D personnel to develop health-related functions with each other.

Smart cars are also one of Huawei's future markets, and Guo Ping reiterated the position that "Huawei will not build cars", but will help partners accelerate the intelligence of the automotive industry.

In addition, the highlighted businesses include HUAWEI CLOUD, data centers, and helping traditional enterprises carry out digital transformation. In terms of HUAWEI CLOUD business, Meng Wanzhou said that HUAWEI CLOUD currently ranks 2nd in China (1st is Google) and 5th in the world, and last year also proposed the strategy of "everything is service", and will continue to implement this strategy in the future.

In terms of the digital economy, Guo Ping specifically mentioned the case of the coal industry, saying that Huawei is accelerating the empowerment of smart mines with digital technology and helping to "dig coal mines in suits and ties." ”

It is foreseeable that serving the real economy will be the main theme of Huawei's future.

No intention of making cores

For Huawei, whether the chip can be self-sufficient is the key to survival. So a widely concerned question is: Will Huawei build a chip factory and build a core?

The speech of Guo Ping, Huawei's rotating chairman, revealed the information that Huawei does not have this plan at present.

"From sand to chips, solving semiconductor problems is complex, chronic, and requires patience. We want to see businesses participate in the market and want to see their success. Guo Ping said.

Huawei also clearly listed the key points of its R&D investment: system architecture optimization, software performance improvement, and basic theoretical exploration. Chip production is not mentioned.

For solving the chip technology blockade, Huawei's proposed technical path is: when the single point technology encounters difficulties, increase system investment, and try to promote the improvement of system capabilities through continuous improvement of components and frameworks. For example, in Wi-Fi6 technology, Huawei tried to use smart antenna technology to make a virtual "lampshade" to suppress interference. In the same high-density space, the device can increase the Wi-Fi system throughput by 50%+, greatly improving the user experience.

"We exchange area for performance and stack for performance to make Huawei's products more competitive, and Huawei will work in this direction in the future." Guo Ping said at the press conference.