Huawei's net profit decline in the first half of the year expanded to 32%, and R&D investment increased by 25.2%

(Deutsche Welle Chinese website) The Shenzhen-based technology and telecommunications giant said its net profit fell to 23.81 billion yuan from January to June this year, an increase from the 32% drop in the same period last year. At the same time, revenue increased 9.6% to 467.82 billion yuan, showing that the company continues to recover from the impact of U.S. sanctions.

The performance figures highlight the cost Huawei has paid to reduce its reliance on foreign technology and expand its artificial intelligence computing and chip capabilities in the face of years of U.S. export restrictions. Rising memory chip prices have also weighed on profitability in its consumer business unit, which includes smartphones.

Huawei said that R&D expenditure increased by 25.2% to 121.38 billion yuan, accounting for 25.9% of revenue. The company has increased its investment in artificial intelligence, communication technology, smart devices and smart car solutions.

The company's product production costs increased by 12.4%, and the growth rate exceeded the revenue growth rate. In addition, administrative costs have increased significantly.

The company said its first-half performance was in line with expectations, but due to external uncertainties and rising input costs, its full-year performance outlook is still under evaluation.

Increase investment

Huawei's business covers smartphones, artificial intelligence chips and telecommunications equipment, but it has not released detailed revenue data for each business segment. The company said that in the first half of the year, revenue from all business segments achieved year-on-year growth.

Huawei's revenue has enjoyed a strong recovery since the United States imposed sanctions and export controls that restricted its access to advanced chips and its Android operating system. In 2021, Huawei's annual revenue fell by 29%.

As one of the Chinese technology companies most affected by U.S. restrictions, Huawei has since invested heavily in developing local alternatives in chips, software and AI computing infrastructure. Its revenue in 2025 increased by 2.2% to 880.9 billion yuan, setting a total annual revenue second only to the record 891 billion yuan in 2020.

This year, Huawei has promoted telecommunications products, new computing hardware, and smart driving technology that focus on AI functions. It has also launched new smartphones, tablets, and wearable devices in domestic and overseas markets.

In the first half of the year, the company's daily operations consumed cash of 39.88 billion yuan, while it generated cash of 31.18 billion yuan in the same period last year. Spending on purchasing goods and services has grown much faster than sales receipts, while inventories have increased by 42% compared with the end of 2025.

Huawei said increased R&D investment and changes in business structure have also put pressure on profitability.

Huawei said in May that it had developed a new semiconductor manufacturing process aimed at bypassing restrictions on access to the most advanced chip-making equipment due to U.S. sanctions imposed since 2019.

Relevant documents also revealed that cases involving Huawei involving bank fraud and sanctions violations will be heard in a U.S. court next week.