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

• R&D spending jumped 25% to 121.38 billion yuan, representing 25.9% of revenue, focused on AI computing, chip capabilities, communications technology, and smart automotive solutions
• Rising memory chip prices weighed on profitability in Huawei's consumer business division, which includes smartphones
• The company continues recovering from U.S. export restrictions that caused a 29% revenue drop in 2021, with 2025 revenue reaching 880.9 billion yuan, its second-highest annual total

Huawei H1 2026 Financial Results Summary

Key Financial Performance:

Huawei Technologies reported a sharp 36% decline in first-half net profit to 23.81 billion yuan ($3.54 billion) for January-June 2026, despite revenue increasing 9.6% to 467.82 billion yuan. The profit decline accelerated from the previous year's performance.

Primary Profit Pressures:

The profit squeeze resulted from multiple factors:

• R&D spending surged 25% to 121.38 billion yuan, representing 25.9% of total revenue
• Rising input costs, particularly memory chip prices affecting the consumer business
• Changes in business mix impacting overall profitability margins

Strategic Focus:

Huawei's aggressive R&D investment targets AI computing capabilities, chip development, communications technology, smart devices, and intelligent automotive solutions. This push aims to reduce dependence on foreign technology following years of U.S. export restrictions that limited access to advanced chips and Google's Android operating system.

Business Context:

The company continues recovering from U.S. sanctions that caused a 29% revenue plunge in 2021. In 2025, Huawei achieved revenue of 880.9 billion yuan (up 2.2%), its second-highest annual total after the 2020 record of 891 billion yuan. All business segments showed year-on-year revenue growth in H1 2026, though detailed breakdowns were not provided.

Outlook:

Huawei indicated results aligned with internal forecasts but maintained uncertainty regarding full-year guidance due to external pressures and elevated input costs. The company continues promoting AI-focused telecoms products, computing hardware, smart-driving technology, and consumer devices across China and international markets.