Huawei H1 profit drop quickens to 36% on rising costs, R&D spending

​China's Huawei Technologies reported a 36% plunge in ​first-half net profit on Monday as soaring ‌input costs ​and heavier spending on research and development outweighed revenue growth. The Chinese technology company said net profit for January to June fell to 23.81 billion yuan ($3.54 ‌billion), accelerating from a 32% drop in the same period a year earlier, while revenue rose 9.6% to 467.82 billion yuan, as it continued to recover from U.S. sanctions.

The results underscore the cost of Huawei's push to reduce reliance ‌on foreign technology and expand its AI computing and chip capabilities after years of U.S. export restrictions. Rising memory ‌chip prices have also weighed on profitability at its consumer business division, which includes smartphones. Huawei said research and development spending rose 25% to 121.38 billion yuan, equivalent to 25.9% of revenue, as it stepped up investment in AI, communications technology, smart devices and intelligent ⁠automotive solutions.

The ​company said its first-half ⁠results were in line with its forecasts, but its full-year outlook remained under review because of external uncertainty and higher input costs. Huawei, whose ⁠business includes smartphones, AI chips and telecoms equipment, did not provide a breakdown of revenue by business segment. It said all ​of its businesses recorded year-on-year revenue growth in the first half.

The company has made a strong ⁠revenue recovery since U.S. sanctions and export controls restricted its access to advanced chips and Google's Android operating system, contributing to a 29% fall ⁠in ​annual revenue in 2021. Huawei, one of the Chinese technology groups most heavily affected by U.S. curbs, has since poured investment into developing domestic alternatives in chips, software and AI computing infrastructure. Its 2025 revenue rose ⁠2.2% to 880.9 billion yuan, its second-highest annual total after a record 891 billion yuan in 2020.

This year, Huawei has ⁠promoted AI-focused telecoms products, new ⁠computing hardware and smart-driving technology, while launching new smartphones, tablets and wearable devices in China and overseas. Increased R&D and changes in the company's business mix also weighed on ‌profitability, Huawei said.

($1 = ‌6.7207 Chinese yuan renminbi)