Huawei profit drops 36% as R&D spending hits $18B

Huawei Technologies reported a 36% plunge in first-half net profit on Monday, as the Chinese technology giant's drive toward self-reliance in chips and AI exacted a growing toll on its bottom line.

Net profit for the six months through June fell to 23.81 billion yuan ($3.54 billion), accelerating from a 32% drop in the same period a year earlier, according to a filing with the Shanghai Clearing House. Revenue, however, rose 9.6% to 467.82 billion yuan, bolstered by recovering smartphone shipments and growing demand for the company's AI processors.scmp+2

The Price of Self-Reliance

The profit decline was driven largely by a 25% surge in research and development spending, which reached 121.38 billion yuan — equivalent to 25.9% of total revenue. Huawei said it stepped up investment across AI, communications technology, smart devices, and intelligent automotive solutions.thestandard+2

Rising memory chip prices further weighed on profitability, particularly within Huawei's consumer business division, which includes smartphones, according to Reuters. Net operating cash flow swung to negative 39.9 billion yuan from a positive inflow of 31.2 billion yuan a year earlier, the South China Morning Post reported.scmp+1

Revenue Growth Amid U.S. Sanctions

Despite the profit squeeze, the results reflect Huawei's continued revenue recovery from years of U.S. export restrictions that cut off its access to advanced chips and Google's Alphabet Inc. ↗ 0.78% Android operating system, contributing to a 29% fall in annual revenue in 2021. The company's 2025 full-year revenue reached 880.9 billion yuan, its second-highest annual total after a record 891 billion yuan in 2020.thestandard

Huawei said all of its business segments recorded year-on-year revenue growth in the first half but did not provide a breakdown by division. The company described the results as in line with its forecasts but said its full-year outlook remained under review because of external uncertainty and higher input costs.thestandard

A Long-Term Bet

As a privately held entity, Huawei discloses financial results periodically through bond filings on the Shanghai Clearing House. Over the past decade, Huawei has spent more than 1.3 trillion yuan on research and development, a level of sustained investment that dwarfs most global technology peers and underscores the scale of China's push for technological independence.cryptobriefing+1

The company has this year promoted AI-focused telecoms products, new computing hardware, and smart-driving technology while launching smartphones, tablets, and wearable devices in China and overseas.thestandard