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Huawei's progress is slowing sharply as US sanctions ease

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GUANGZHOU, China – Huawei's revenue growth slowed sharply in the third quarter, while its margin fell as US sanctions disrupted business.

Revenue for the September quarter was 217.3 billion yuan ($ 31.91 billion), up only 3.7% from 209.5 billion yuan for the same period last year.

Revenue for the first nine months of the year was 671.3 billion yuan ($ 98.57 billion), up 9.9% from 610.8 billion yuan for the same period last year. That is a significant slowdown in growth. In the first nine months of 2019, Huawei's revenue growth was 24.4%

Huawei's net profit margin was 8% for the first nine months of the year, compared to 8.7% for the same period last year.

Washington's sanctions are clearly damaging the Chinese tech giant. Last year, Huawei was placed on a US export blacklist known as the Entity List. Google cut ties with Huawei, which meant the Chinese company's smartphones could no longer use licensed Android mobile operating system software. This has hurt Huawei's smartphone sales outside of China while the domestic market has flourished.

Huawei has not released a breakdown of which parts of its business contributed to sales growth. Earlier this year, Huawei announced that its consumer business, which includes smartphones, was responsible for almost all of the $ 12 billion decline in 2019 sales compared to its own targets.

For the first three quarters of 2020, Huawei said the results "basically met expectations".

"As the world grappled with COVID-19, Huawei's global supply chain came under severe pressure, and production and operation became increasingly difficult," the company said in a press release.

"During the release, the company said it would do its best to find solutions, survive and move forward, and meet its obligations to customers and suppliers."

Huawei now faces even greater challenges. Earlier this year Washington imposed further sanctions on Huawei, which threatened to stop supplying its main supplier TSMC with semiconductors. This could paralyze the smartphone business, analysts previously told CNBC. Huawei has very few options to circumvent these sanctions.

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Katherine Clark