Blacklisted Huawei posts record profits despite U.S. sanctions — Chinese tech giant raked in $7.7B in net profit in 1H 2024

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7nm at home makes a lot of difference, apparently.

Huawei
(Image credit: Shutterstock)

As a high-tech giant whose capabilities span from 'almost' fundamental research to end-user consumer products, Huawei has been targeted by the U.S. government's sanctions for quite a while amid suspicions of ties with the Chinese military. However, according to data from the Chinese Business Network (CBN), the company has adapted to sanctions as its consumer business revived in the first half of the year.

Before we dive into details, which are hard to do without knowledge of what we do know so far, we should know that what we do know is based on third-party reports.

Huawei's revenue for the first half of 2024 reached CNY 417.5 billion, representing a 34.3% increase compared to last year. The company also achieved a net profit of CNY 55.1 billion, an 18.2% year-on-year rise, marking the best performance in its history for this period. These record figures show that after the U.S. started to impose sanctions against Huawei in mid-2020, its business took a significant hit, so, before 2024, the company's record financial results were achieved in the first half of 2020.

Huawei's revenue for the first half of the year exceeded the CNY 401.3 billion reported in the first half of 2019 and is second only to the CNY 454 billion posted in the first half of 2020.

Furthermore, this is the first time that Huawei's net profit for the first half of the year has exceeded CNY 50 billion (up from CNY 46.6 billion last year), with the profit margin reaching 13.2%.

Huawei comprises five segments: ICT Infrastructure, Consumer Business, Cloud Computing, Digital Power, and Intelligent Automotive Solutions. While Huawei does not disclose specific revenue details for each segment, last year's report indicated that consumer business remains the primary revenue driver, yet Huawei Cloud shows the fastest growth.

The first thing that comes to mind about Huawei's consumer products is the latest premium Mate and P-series smartphones, which are based on SMIC's Kirin 9000-series application processors made on its 2nd generation process technology, as well as Ascend 900-series processors for AI. That technology is largely considered a loss for SMIC, but it looks like Huawei has negotiated a deal under which its contractor absorbs the costs.

Anton Shilov
Anton Shilov
Contributing Writer

Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

14 Comments Comment from the forums
  • vanadiel007
    Well, that to me is another indication that trade sanctions hurt the consumer rather than the sanctioned companies.

    Prices of everything keep going up here in North America, while we wage a war of sanctions that seem to have little to no effect on some sanctioned companies.
    Reply
  • The Historical Fidelity
    More like SMIC is subsidized by the government to produce 7nm chips and sell them to Huawei at a significant loss.
    Reply
  • tristanx
    They are forgetting there are other countries they can do business with. Those legacy brand countries has competition and no longer has the power over everything. On top of that, pricing issue.
    Reply
  • nookoool
    Huawei is becoming a beast of a company. I would not be surprise if Huawei will have to separate some business line once China can overcome the chip hurdles.
    Reply
  • Gururu
    I don’t think sanctions are intended to stifle their ability to sell abroad as much as they are intended to protect our consumer goods from prying eyes.
    Reply
  • nookoool
    Gururu said:
    I don’t think sanctions are intended to stifle their ability to sell abroad as much as they are intended to protect our consumer goods from prying eyes.

    That doesn't make any sense. You can just not buy it.
    Reply
  • zsydeepsky
    The Historical Fidelity said:
    More like SMIC is subsidized by the government to produce 7nm chips and sell them to Huawei at a significant loss.
    you don't need to guess, since SMIC is an open company and they have to release their financial report.
    the latest report is here (2024 Q2): https://www.smics.com/uploads/66b4a5ec/Q2_2024%20Financials%20Presentation.pdf
    just some quotes:

    Revenue was $1,901 million
    – Up 8.6% QoQ from $1,750 million in 1Q24
    – Up 21.8% YoY from $1,560 million in 2Q23

    Gross margin was 13.9%
    – Compared to 13.7% in 1Q24
    – Compared to 20.3% in 2Q23


    obviously they aren't in the same good place like TSMC which enjoys 50%+ gross margin, but they aren't suffering "significant loss".
    Reply
  • The Historical Fidelity
    zsydeepsky said:
    you don't need to guess, since SMIC is an open company and they have to release their financial report.
    the latest report is here (2024 Q2): https://www.smics.com/uploads/66b4a5ec/Q2_2024%20Financials%20Presentation.pdf
    just some quotes:

    Revenue was $1,901 million
    – Up 8.6% QoQ from $1,750 million in 1Q24
    – Up 21.8% YoY from $1,560 million in 2Q23

    Gross margin was 13.9%
    – Compared to 13.7% in 1Q24
    – Compared to 20.3% in 2Q23


    obviously they aren't in the same good place like TSMC which enjoys 50%+ gross margin, but they aren't suffering "significant loss".

    Okay and so you take the 2.6 billion yuan (365.5 million USD) given to SMIC by the government for 2023 and SMIC’s admitted cost for their 7nm node being 50% greater with much worse yields than TSMC and you get significant loss. SMIC loses money on every 7nm chip sold. The only reason SMIC still makes a profit is due to their legacy node production and government subsidies.

    https://www.scmp.com/tech/tech-war/article/3274599/tech-war-china-pumps-state-subsidies-chip-industry-counter-us-sanctions?module=perpetual_scroll_0&pgtype=article
    Reply
  • zsydeepsky
    The Historical Fidelity said:
    Okay and so you take the 2.6 billion yuan (365.5 million USD) given to SMIC by the government for 2023

    that's exactly why I consider SMIC is in good place. because if you look at Intel, you will realize that SMIC is only getting like 1/50 of the subside Intel got from the US gov and Intel is truly suffering heavy loss.

    https://www.reuters.com/technology/intel-clinches-nearly-20-bln-awards-biden-boost-us-chip-output-2024-03-20/
    Reply
  • The Historical Fidelity
    zsydeepsky said:
    that's exactly why I consider SMIC is in good place. because if you look at Intel, you will realize that SMIC is only getting like 1/50 of the subside Intel got from the US gov and Intel is truly suffering heavy loss.

    https://www.reuters.com/technology/intel-clinches-nearly-20-bln-awards-biden-boost-us-chip-output-2024-03-20/
    A one time subsidy for Intel is not the same as yearly subsidies given to SMIC. And Intel as a company represents a combined product company that has both foundries and end user product design elements. One could argue Intel’s foundries are doing just fine, but stressed in product design due to tough competition from AMD. Whereas Huawei has a monopoly on design in their respective market.
    Reply