Judging from the 2021 annual financial report released by Huawei recently, there was a decline in revenue for the first time in 5 years, a decline of more than 28%. In terms of net profit, there was the highest increase in 5 years, an increase of more than 75%. Why is that?
1. Three reasons for the decrease in revenue
It can also be seen from the financial statements that in Huawei's three main business segments, only the revenue of the enterprise business increased by 2.1% weakly. Consumer business fell 49.6% directly. Carrier business also fell by 7 percent. Why is this happening? There are also three reasons:
, U.S. suppression
Judging from the revenue figures, the decline in consumer business is the main reason for huawei's revenue decline. The decline in consumer business was mainly affected by the US crackdown. In 2019, in order to limit Huawei's development, the United States put Huawei and its subsidiaries on the "entity list" of export controls for various reasons. In 2020, the US crackdown on Huawei has further strengthened. Huawei is prohibited from using US chip design software, and chip processing companies such as TSMC are prohibited from producing chips for Huawei. Although Huawei has stockpiled a lot of chips, over time, the inventory has gradually decreased. 2020 is not so obvious, and 2021 is becoming more and more obvious.
3. The impact of the epidemic
The outbreak of COVID-19 at the end of 2019 has pushed the world's economies to pause. Although China's anti-epidemic work has been done very well, it has not been able to indulge in Western countries, which eventually led to the spread of the epidemic to this day. Affected by the epidemic, various industries in various countries are not on hand, and the same is true for Huawei, where the reduction in orders has led to a decrease in revenue. This is also one reason for the weak growth of enterprise business.
5G construction demand weakened
In China, 5G communication networks began construction in 2018 and have basically covered large and medium-sized cities by 2020. By 2021, the construction of 5G by the three major operators has entered the stage of construction while operating. The demand is not so large, nor is it so urgent, coupled with the impact of the epidemic, the market demand is naturally not so large. At the same time, due to the suppression of the United States in overseas markets, many Western countries not only no longer purchase Huawei's 5G, but even dismantle the existing Huawei 5G.
2, the reason for profit growth
According to Huawei's financial report, Huawei's net profit in 2021 mainly comes from the income from the sale of some businesses, the improvement of operating quality, and the optimization of product structure. The sale of some of the business was mainly reflected in the financial report as a net gain on the disposal of subsidiaries and businesses, with a total amount of 57.4 billion yuan. This should include: selling honor brand mobile phones to Shenzhen Zhixin in 2020 and selling X86 business to super fusion in 2021. If this part of the revenue is removed, Huawei's sales profit is a loss of 8.4 billion.
The improvement of business quality and the optimization of product structure mainly refer to the fact that Huawei attaches importance to cooperation with the ecosystem to create more solutions, and pays attention to software and hardware research and development to help customers create value. At a difficult time in 2021, Huawei's R&D expenditure is still as high as 142.7 billion yuan, accounting for about 22.4% of the annual revenue.
summary
Huawei's revenue reduction is really a reduction, which is a manifestation of Huawei's difficult times. The increase in profits is the result of the business Huawei's broken arm survival, which is a forced way. But this approach cannot be sustained, so huawei not only emphasizes "living", but also emphasizes "quality living".