Huawei reports 25 per cent jump in R&D spending for first half of 2024
Rising research costs and component prices lead to net profit decline despite revenue growth
Quick Look
- Huawei's R&D spending rose 25% to 121.4 billion yuan in H1 2024, contributing to a net profit drop to 23.8 billion yuan.
- Despite the profit decline, revenue increased by 9.55% to 467.8 billion yuan, driven by smartphone shipments and AI processor demand.
AI-generated summary
Why It Matters
Huawei is a privately held company that discloses operational figures through bond issuance filings. The company is currently focusing on AI processors and smartphone market recovery.
R&D expenses jumped 25 per cent year on year to 121.4 billion yuan (US$18 billion) for the six months through June, accounting for over 25 per cent of total revenue, according to a filing on Monday with the Shanghai Clearing House, the primary central clearing counterparty in China’s interbank market.
The surging technology spending, as well as rising component costs, pushed net profit for the Shenzhen-based giant down to 23.8 billion yuan from 37.2 billion yuan in the same period last year.
Net operating cash flow also took a heavy hit, swinging to negative 39.9 billion yuan from a positive inflow of 31.2 billion yuan in the same period last year.
Still, revenue for the period rose 9.55 per cent to 467.8 billion yuan from 427 billion yuan a year earlier, bolstered by a strong rebound in smartphone shipments and accelerating demand for its artificial intelligence processors.
As a privately held entity, Huawei occasionally releases its operational figures via bond issuance disclosures on the clearing venue.
Open Questions
- What specific components are driving the rising costs?
- How sustainable is the negative operating cash flow?
