Per reporter: Wang Jing Per editor: Dong Xingsheng
On the afternoon of March 28, Huawei held a press conference for its 2021 annual report. Guo Ping, huawei's rotating chairman, and Meng Wanzhou, vice chairman and CFO of Huawei, attended the press conference, which was also the first public appearance of Meng Wanzhou after returning to China.
According to the financial report, in the whole year of 2021, Huawei achieved global sales revenue of 636.8 billion yuan, down 28.56% year-on-year; net profit was 113.7 billion yuan, an increase of 75.9% year-on-year. Among them, the operator business revenue was 281.5 billion yuan, the enterprise business income was 102.4 billion yuan, and the terminal business income was 243.4 billion yuan. It is worth noting that the whole year of 2021 is the first calendar year that Huawei has spent after the United States imposed comprehensive export controls on Huawei.
Image source: Video screenshot
"We're getting smaller, but our profitability and cash flow access are increasing, and the company's ability to cope with uncertainty is increasing." Meng Wanzhou said.
For Huawei's performance in 2021, Guo Ping said: "Huawei's overall operating situation is in line with expectations, operator business performance is stable, enterprise business is growing steadily, terminal business is developing rapidly, and new industries and ecological construction are entering the fast lane. ”
Looking forward to 2022, Guo Ping said: "We will continue to survive and seek development, and our survival and development in the future will rely on continuous strong investment in the field of research and development." He also stressed that Huawei will move forward in the direction of digitalization, intelligence, and low carbon, rely on the three elements of talent, scientific research and innovation spirit, continue to increase investment, and strive to reconstruct the technical base of basic theory, architecture and software to build long-term competitiveness.
Consumer business hit hard To vigorously develop new businesses such as wearables
As for the reasons for the decline in revenue in 2021, Meng Wanzhou explained: "First, in the past three years, Huawei's supply chain challenges have continued to increase; secondly, multiple rounds of US sanctions have had a greater impact on Huawei's mobile phones and PCs; third, Huawei has also been under pressure under the epidemic." Since the U.S. Department of Commerce put Huawei on the Entity List in May 2019, the "global supply chain system" on which Huawei relies has been frequently challenged, and now it is the third year of "load bearing".
Despite the decline in sales revenue, Huawei's net profit hit a record high.
In 2021, Huawei's net profit reached 113.7 billion yuan, an increase of 75.9% year-on-year. Among them, the net income from the disposal of subsidiaries and businesses was 57.431 billion yuan. In terms of operating cash flow, Huawei reached 59.7 billion yuan in 2021, up 69.4% year-on-year; the asset-liability ratio fell to 57.8%. The resilience and resilience of the overall financial structure are strengthening.
Image source: Huawei official website
Specific to the three major BGs (business groups), in 2021, Huawei's operator business achieved sales revenue of 281.5 billion yuan, down 6.97% year-on-year; enterprise business achieved sales revenue of 102.4 billion yuan, an increase of 2.09% year-on-year; and the most concerned consumer business achieved sales revenue of 243.4 billion yuan, down 49.60% year-on-year.
From the data point of view, the supply chain encountered obstacles mainly hit Huawei's consumer business. Guo Ping said frankly: "The us sanctions for many years have caused a very big decline in Huawei's consumer business. ”
Last year, in the case that Huawei could not obtain sufficient supply of core components, Apple once again became the largest mobile phone brand in the Chinese smartphone market after 6 years. Counterpoint Research data shows that in the fourth quarter of 2021, Apple's market share in China reached an all-time high of 23%. Huawei's sales fell 73% and its market share was 7%.
Commenting on Apple's performance, Counterpoint research analyst Mengmeng Zhang said: "The hot sales of the new iPhone 13 are mainly due to the release of relatively low starting prices in China, as well as new cameras and 5G features. At the same time, it also benefits from the market share of some of the original Huawei high-end models. ”
In January this year, Apple released its fiscal 2022 first quarter earnings report showing that the company achieved revenue of $123.9 billion, an increase of 11.3% year-on-year. Revenue in Greater China was US$25,783 million, up 21% from US$21,313 million in the same period last year.
Under pressure from consumer businesses such as mobile phones, Huawei's response is to strive to develop other businesses, including expanding its terminal business from smartphones to sports health, wearable devices, and whole-house smart. Huawei said: "In 2021, Huawei's smart wearables, smart screens, TWS headsets and consumer cloud services will continue to grow, of which wearable devices and smart screen business revenue increased by more than 30% year-on-year." ”
In addition, the reporter noted that in the middle of this month, at the 2022 Huawei Whole House Intelligent and All-Scenario New Product Spring Conference, Huawei released a new whole house smart host, mainly for >
Image source: Screenshot of Huawei's annual report
In addition to hardware, on the front of the software ecosystem, Huawei is also in a hurry.
At present, Hongmeng and Euler are two operating systems focused on By China. Among them, Hongmeng system is used in intelligent terminals, Internet of Things terminals, industrial terminals, while Euler system is mainly used in servers, edge computing, cloud computing, embedded and other forms of equipment, supporting diversified computing, is committed to providing a safe, stable and easy-to-use operating system, covering all scenarios from IT, CT to OT digital infrastructure.
As early as November 2021, Euler and Hongmeng have realized kernel technology sharing, and Huawei plans to transplant Hongmeng's distributed soft bus capabilities to Euler in the future, so that devices equipped with Euler's operating system can automatically identify and connect Hongmeng terminals.
"In the industrial scenario, Euler and Hongmeng can have more synergy, Euler is suitable for industrial equipment with high reliability and strong certainty; Hongmeng is suitable for industrial terminals with strong interaction, and Euler and Hongmeng docking can better provide full-stack industrial scenario solutions." Deng Taihua, vice president of Huawei and president of the computing product line, once said.
According to the reporter's understanding, at present, a number of operating system manufacturers have developed commercial distributions based on OpenEuler, such as Tongxin, Puhua, Kirin, zhongke Chuangda and so on. In addition, the three major operators, China Telecom, China Unicom and China Mobile, have also developed their own operating systems based on OpenEuler.
Regarding the recent progress of HarmonyOS, Huawei said that 220 million Huawei devices have been equipped with The Hongmeng system, making it the fastest growing mobile terminal operating system in the world. At the same time, HarmonyOS Connect has more than 1,900 ecological partners, and more than 4,500 product categories have been certified by Hongmeng Zhaopin. In addition, in the past year, more than 8 million developers have adopted Huawei's open platform, open source software, and rich development tools to explore new business scenarios and business models.
C-end business under pressure B-end business has become the new "granary"
After the C-end service is under pressure, the B-end service has become an important "granary" for Huawei. The reporter noted that in 2021, the operator business once again became Huawei's largest source of revenue, and before that, the consumer business once became half of Huawei's country. Huawei revealed: "Together with operators and partners, Huawei has signed more than 3,000 commercial contracts for 5G industry applications, and 5G is commercially available in manufacturing, mining, steel, ports, medical and other industries. ”
In addition, Huawei has also begun to make efforts in the fields of digital energy, smart cars, and cloud computing.
In June 2021, Huawei spent 3 billion yuan to establish Huawei Digital Energy Technology Co., Ltd., and in October 2021, Huawei established five major legions, including the Coal Mine Corps, the Smart Photovoltaic Corps, and the Data Center Energy Corps. For the coal mining corps, Ren Zhengfei has said that coal mines may become a very important business growth point for Huawei. Through the combination of ICT technology and coal mining technology, Huawei can help the coal industry to carry out digital and intelligent transformation, realize a "safe, fewer people, no one, efficient" production model, and also allow coal miners to "wear suits and ties" in the future.
Recently, Huawei appointed 10 more reserve corps leaders, covering the fields of campus networks, data center networks, data center bases, site and module power supplies, airport rails, and power digital services.
At the financial report, Huawei said that for key industries such as government, transportation, finance, energy, and manufacturing, Huawei released 11 scenario-based solutions, and established legions such as coal mines, smart highways, customs, and ports to integrate resources and efficiently serve customers. More than 700 cities and 267 Fortune Global 500 companies have chosen Huawei for digital transformation, and the number of service and operation partners has grown to more than 6,000.
In addition to the reform of the "Legion" business model, Huawei is also frequently moving in the automotive field. At the meeting, Guo Ping reiterated again: Huawei does not build cars. In fact, Huawei's goal in the automotive track is to continue to participate in the automotive industry as a supplier of smart auto parts.
Image source: Screenshot of the annual report
As a long-term strategic opportunity point for Huawei, the smart auto parts business has invested heavily. In April 2021, Wang Jun, president of Huawei's intelligent vehicle solution BU, said that in 2021, Huawei's investment in intelligent vehicle solutions will reach 1 billion US dollars, and the R&D team will reach the scale of 5,000 people, of which more than 2,000 people will be autonomous driving.
In terms of business results, Huawei's smart auto parts business has listed more than 30 smart auto parts, and in 2021, a number of innovative solutions such as Harmony OS intelligent cockpit, 4D imaging radar, MDC 810, "Huawei Octopus" automatic driving open platform, and intelligent thermal management system will be released.
In January this year, Yu Chengdong, CEO of Huawei's consumer business and CEO of the intelligent vehicle solution business unit, said in an interview that in 2022, Huawei will challenge the sales target of 300,000 cars per year, and the annual sales of cooperative car companies will reach 100 billion yuan.
Continue to maintain a strong input and do three refactorings
In the face of a severe external environment, Huawei's performance decline is expected, but what is more concerned about the outside world is whether Huawei will be competitive in the future?
"The value of a company is not only reflected in the results of financial statements, especially for high-tech companies like Huawei, long-term investment in the future can illustrate the true value of an enterprise." Meng Wanzhou said.
In fact, even in the face of multiple adjustments, Huawei is still investing heavily in research and development. According to the financial report data, in 2021, Huawei's R&D investment reached 142.7 billion yuan, accounting for 22.4% of the annual revenue, and the cumulative R&D expenditure invested in the past decade exceeded 845 billion yuan.
Guo Ping explained: "In the face of the difficulties that advanced technology cannot obtain, if we want to survive, we must increase strategic investment, and actively seek a breakthrough in the system when a single point of technology leadership encounters difficulties." In addition, Huawei is also enhancing breakthrough research in basic science and cutting-edge technologies. ”
For the specific R&D direction, Huawei summarizes three reconstructions, namely basic theoretical reconstruction, architecture reconstruction, and software reconstruction. In a speech at this year's Pakistan Exhibition, Guo Ping once said: "It is predicted that the digital economy will account for more than 50% of GDP this year, and with the rapid development of the global digital economy, the demand for digitalization has exceeded expectations, and Shannon's theorem and the von Neumann architecture have encountered great bottlenecks." ”
Under the current theory and architecture can not support the explosive growth of digital demand, Guo Ping believes that the industry needs to explore new theories and new architectures, and reconstruct the technical base to support digital sustainable development. Taking channel capacity increase as an example, Guo Ping said that the channel capacity is close to the ceiling. Huawei continues to explore theories and technologies such as a new generation of MIMO and wireless AI to further approach the Shannon limit, and at the same time research new theories such as semantic communication, trying to surpass the Shannon limit and open up a broader development space for communication.
In terms of architecture reconstruction, Guo Ping said that wireless communications are still facing major technical challenges such as high frequencies, ultra-large bandwidth, and ultra-high speed, and Huawei is actively exploring new technologies to reconstruct the architecture, such as introducing optoelectronic fusion technology, solving key problems, and breaking through the process bottlenecks faced by future chips.
However, for the chip supply problems that the outside world is concerned about, Guo Ping responded: "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, Huawei is also happy to see more and more enterprises involved, in the case of advanced technology is not available, Huawei will actively look for systematic breakthroughs." ”
Finally, there is software refactoring. Guo Ping mentioned that facing the future, with the outbreak of AI, the demand for computing power has increased sharply, but the progress of hardware processes has slowed down, so Huawei has proposed a "software performance multiplication plan", for example, key indicators such as the number of wireless cells and scheduled users have been doubled through software optimization.
Facing the future, Guo Ping pointed out: "Huawei's problem is not solved by cutting down on food and clothing, and we will continue to maintain a strong investment." Huawei should optimize the system architecture, improve software performance, and explore theories, and build a highly credible and reliable supply chain by solving technical and technological problems. ”
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