Huawei’s profit took a hit in 2024 — but the company could be playing the long game

Huawei is no stranger to setbacks. It has been battling U.S. sanctions for years, lost access to crucial Western technology, and even had to spin off one of its most successful smartphone brands, Honor, just to keep it alive. And yet, the company keeps moving forward.

In 2024, Huawei’s revenue jumped 22% to 862.1 billion yuan ($118.2 billion), its fastest growth in five years. But the good news ends there—profit sank 28% to 62.6 billion yuan ($8.63 billion), weighed down by massive research spending and the lack of a one-time cash boost from the Honor sale that padded its earnings in 2023.

Instead of cutting costs, Huawei is doubling down on innovation. It spent 179.7 billion yuan ($25 billion) on R&D, with more than half its workforce—113,000 employees—focused on developing new technologies. This strategy is key to Huawei’s survival, as U.S. sanctions continue to block access to advanced chips and software, forcing the company to build its own alternatives.

This strategy is starting to show results. Huawei’s consumer electronics division, which includes smartphones and digital gadgets, saw revenue climb 38% to 339 billion yuan. Just a few years ago, many had written off Huawei’s phone business after U.S. sanctions stripped it of Google services and premium chip suppliers. But Huawei pivoted—developing its own operating system, HarmonyOS, and leaning on China’s growing domestic supply chain to stage a comeback. Its latest flagship smartphones, featuring in-house Kirin chips, are selling well in China despite limited access to top-tier semiconductor technology.

The company’s intelligent automotive solutions division is another surprise success. Revenue jumped more than fourfold to 26.4 billion yuan, turning a profit for the first time.

Other segments also posted solid growth. Huawei’s cloud computing revenue climbed 8.5%, and its digital power unit, which focuses on energy solutions, rose 24.4%. The company’s core information and communication technology (ICT) infrastructure segment remained its largest earner, growing 4.9% to 369.9 billion yuan. Still, profit margins slipped from 46.2% to 44.4%, reflecting the costs of expansion.

But the road ahead isn’t getting any easier. U.S. sanctions remain in full force, barring Huawei from crucial Western technologies and pressuring allies like the UK, Japan, and Australia to ban its telecom equipment. But Huawei has been here before. After losing nearly a third of its revenue in 2021 due to restrictions, the company rebounded. The 2024 revenue was its second-highest ever, just short of its 2020 peak.

Looking ahead, Huawei is preparing for its next big move: the Ascend 910C chip, rumored to rival NVIDIA’s H100 in China. If successful, it could cement Huawei’s position in AI and high-performance computing.

For now, profits may be down, but Huawei is playing the long game. And if its history is any indication, it’s not backing down anytime soon.