Huawei announced a 67 percent drop in its profits during the first quarter of the year as the tech giant battles U.S. trade and investment sanctions.
The company reported 131 billion yuan ($20.63 billion) in revenue for the first quarter, a 13.9 percent drop from the same period last year and a 27 percent decline from the fourth quarter in 2021.
The quarter’s net profit margin narrowed to 4.3 percent, translating to 5.6 billion yuan in net income. That is well below last year’s reported margin of 11.1 percent and net income of 16.9 billion yuan.
“Our consumer business was heavily impacted, and our [information and communications technology] infrastructure business experienced steady growth,” Ken Hu, Huawei’s rotating chairman, said in a statement.
“In 2022, we still face a challenging and complicated business environment.”
Huawei’s statement did not give reasons for the earnings slump, but a person close to the matter told Bloomberg that the firm was experiencing waning sales and rising research and development costs.
The company had allocated 22.4 percent of its 2021 sales to develop chips and telecom gear to withstand sanctions imposed by former President Donald Trump, which restricts it from buying critical electronic components from U.S. suppliers.
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