Meng Wanzhou's first public appearance "Survival and Development" in Huawei's annual report

On the afternoon of March 28, Huawei's 2021 annual report will arrive as scheduled, and after a series of storms such as US sanctions and chip tensions, Huawei's revenue has declined, but profits have hit a new high. It is worth noting that at the annual report performance meeting, Huawei Vice Chairman and CFO Meng Wanzhou made his first public appearance after returning to China last year. Faced with difficulties on chips, Huawei said it will use the system to break through and resolve the difficulties in obtaining key components. Its expansion in the field of smart wearable devices and smart homes has also given consumers more room for imagination.

Carrying through a crisis is not about "cutting back on food and clothing"

According to the financial data released by Huawei, Huawei's annual revenue in 2021 was 636.8 billion yuan, down 28.6% year-on-year, and net profit was 113.7 billion yuan, an increase of 75.9% year-on-year.

In addition, Huawei's R&D expenses reached about 142.7 billion yuan, up 0.5% year-on-year, and the R&D expense ratio was 22.4%, up 6.5% year-on-year. To a certain extent, this also confirms what Guo Ping, huawei's rotating chairman, said: "Huawei's problems are not solved by cutting down on food and clothing." Meng Wanzhou also said at the meeting that compared with shareholders' rights, Huawei is more concerned about customers and consumers, and Huawei takes out at least 10% of the revenue every year for research and development.

In fact, in the face of sanctions imposed by the United States for many years, Huawei's development in recent years has also been quite bumpy, Guo Ping said at the meeting: "In 2021, we survived, but the problems we faced have not been completely solved, and we will continue to 'survive and seek development' in 2022." The challenges of the external environment are also reflected in the financial data, in 2021, Huawei's revenue in Europe, the Middle East, Africa, Asia-Pacific, the Americas and other places fell by 27.3%, 16.7%, 26.3% respectively.

In addition, the chip supply storm also tested Huawei's smartphone business, and in 2021, Huawei's consumer business revenue was 243.4 billion yuan, down 49.6%. 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.

In this regard, Huawei relies on its strong financial strength to prescribe a "reassuring pill" for the market, and in 2021, Huawei's operating cash flow has increased significantly, reaching 59.7 billion yuan, while the asset-liability ratio has decreased to 57.8%. Meng Wanzhou said that "cash is the guarantee of Huawei's research and development" and said that "the company's ability to cope with uncertainty is constantly improving."

Chip breakthrough depends on systematic breakthroughs

Putting aside the figures on the books, the market is more concerned about Huawei's chip problem, and some media at the meeting asked Huawei how to deal with the problem of tight chip supply and whether there is a plan to build its own chip factory.

In this regard, Guo Ping said: "The United States has brought many difficulties to Huawei for many years of sanctions, in the global environment, technology repeated development is not necessarily valuable, but under the market division and technology blockade, technology investment has commercial value." However, he stressed more that Huawei will take systematic breakthroughs to resolve the dilemma that key components are difficult to obtain.

The so-called systemic breakthrough, that is, "Huawei plans to exchange area and stack performance so that products with less advanced processes can also be competitive." "The industry view is that the current 5G RF chip mainly uses body acoustic waves, but this technology is monopolized by several foreign companies such as Skyworks, Qorvo, broadcomm and so on. Although domestic companies have also developed 5G RF chips and have independent core knowledge sovereignty, they are still lacking in meeting commercial needs.

Can this be Huawei's way to break the game? Communications expert Ma Jihua is optimistic about this, and told the Beijing Business Daily reporter: "In fact, whether it is Google server, or Tesla's car battery, or 5G base station, under the premise of no revolutionary technology, the stacking method is taken to improve performance, as far as smart terminals are concerned, the stacking method is feasible to a certain extent." This way can be used as a buffer, waiting for a new technology cycle to arrive, overtaking in curves."

Xu Yiqiang, a consumer electronics expert, believes that the stacking method is only the most effective method at present, and the breakthrough in high-end chip capabilities is the final solution.

Consumer business expects "multi-point blossoming"

In addition to bypassing the "roadblock" of chips through process innovation, Huawei also hopes to "blossom at multiple points" in the fields of wearable devices and whole house smart homes, and seek more growth points in consumer business.

In 2021, Huawei's smart wearables, smart screens, TWS headsets, and consumer cloud services all achieved sustained growth, of which wearable devices and smart screen business revenue increased by more than 30% year-on-year. Guo Ping said at the meeting that Huawei is expanding new businesses such as wearables, sports health, and whole house intelligence. At present, Huawei wearables are developing at a high speed.

In recent years, Huawei has successively launched V75 Super, V98 and other new generations of Huawei smart screen V series products, which contain Huawei's technical efforts, such as the smart screen V75 Super for the first time using SuperMiniLED backlight technology, to achieve up to 2880 physical partitions and 3000 nits peak brightness. HarmonyOS, changlian calls, smart screen K songs, etc. are Huawei's explorations in innovative application scenarios.

In the field of whole house intelligence, the solution given by Huawei is 1 smart host, 2 sets of core solutions, with N subsystems, that is, a central control system, with full coverage of WiFi, and a series of intelligent hardware subsystems.

Compared with Haier and Gree's more established home appliance companies, how can Huawei's advantages be reflected? Xu Yiqiang believes that Huawei will not be entangled in the competition of a single product and program in the whole house intelligence, and more or based on the ability of the platform, especially the open mind, to integrate the products and solutions of different enterprises to meet the needs of home users. He also said that "Huawei's biggest advantage lies in the trust of the company's platform and brand, and it is easy to get more user recognition."

Ma Jihua said that Huawei's independent hardware chips and software platform Hongmeng are its powerful weapons in market competition.

At the meeting, Meng Wanzhou used "one day in the cave, the world has been a thousand years" to describe the feelings after returning to China. Huawei still needs to face many challenges in the future, but it also gives the market enough room for imagination.

Beijing Business Daily reporter Jin Chaoli intern reporter Wang Zhuli