Login to Continue Learning
The U.S. trade sanctions impacted Huawei in 2020, putting the company in a precarious position when it was forecasted to surpass Samsung as the largest smartphone brand by 2025. Despite these challenges, Huawei continued to invest heavily in research and development (R&D) to secure its future. However, this decision came at a cost, leading to a significant drop in net earnings for the first half of 2025.
A massive 32 percent decrease in profit had to be endured by Huawei as it aimed to achieve self-sufficiency from external companies. In the first half of 2025, Huawei generated an impressive revenue of 427 billion yuan (approximately $59.84 billion), the highest since 2020. Reuters reported that this decline in profit was due to increased R&D spending as Huawei sought to overcome U.S. sanctions.
During the January to June period, Huawei’s expenditure on R&D surged from 88.9 billion yuan ($12.46 billion) in the first half of 2024 to 96.9 billion yuan ($13.58 billion). The company’s resurgence was evident with the launch of its flagship smartphone series, the Mate 60, equipped with the Kirin 9000S chip produced using SMIC’s 7nm process. This move sparked debates across the technology industry, with the U.S. government arguing that Huawei violated trade sanctions.
Currently, without access to advanced EUV (Extreme Ultraviolet) lithography machines, Huawei cannot develop cutting-edge chipsets for various product lines. As China’s largest semiconductor manufacturer, SMIC is limited to the 7nm node. However, Huawei’s partner SiCarrier is developing custom EUV equipment that could reduce dependency on companies like ASML and boost technological prowess against U.S. sanctions.
In summary, Huawei’s commitment to R&D to become self-sufficient has resulted in a significant drop in profits but has also propelled its revenue to new heights.
