Despite Semiconductor Chip Supply Shortage... China Huawei "Sufficient Stockpiled for 2 Years" (Comprehensive)

Event on the 31st: Announcement of Huawei 2020 Annual Report

Ken Hu, Huawei Rotating Chairman, is speaking at the 'Huawei 2020 Annual Report' presentation event on the 31st (Korean time). Photo by Huawei Online Media Conference video capture

[Asia Economy Reporter Cha Min-young] Amid the ongoing global semiconductor chip supply shortage, Ken Hu, Huawei's rotating chairman, expressed confidence on the 31st (Korean time) by stating that "we have sufficiently stockpiled semiconductor chips for two years." Defying last year's COVID-19 pandemic and U.S. government sanctions, Huawei recorded a 3.8% sales growth compared to the previous year. This year, the company plans to increase sales to enterprise customers outside the U.S. in line with the digital transformation demand in the post-COVID era.

Semiconductor Chip Stockpiling... Current Inventory is Sufficient

At the 'Huawei 2020 Annual Report' presentation event, Ken Hu said, "We mobilized a lot of cash to stockpile (semiconductor chips) in response to two years of unfair U.S. sanctions," adding, "Satisfying enterprise customers is currently manageable with the existing inventory."

He also introduced that the operational status of HiSilicon, Huawei's semiconductor design subsidiary, is stable. HiSilicon designs and develops proprietary application processors (APs) installed in Huawei smartphones. APs are key components often called the "brain of the smartphone."

Ken Hu stated, "HiSilicon is operating quite stably," and self-assessed, "Huawei's position remains as an 'Information and Communications Technology (ICT) system equipment supplier,' and HiSilicon possesses excellent design capabilities."

Growth Despite COVID-19 and U.S. Sanctions Last Year

Huawei continued to grow last year despite the overlapping challenges of the COVID-19 pandemic and U.S. sanctions. Although the consumer segment, including smartphones, was relatively sluggish, the business-to-business (B2B) segment's performance offset this.

According to Huawei's 2020 annual report released that day, the company posted sales of 891.4 billion yuan (approximately 153.52 trillion KRW), a 3.8% increase from the previous year. Net profit for the same period rose 3.2% to 64.6 billion yuan (approximately 11.13 trillion KRW). Operating profit margin declined for two consecutive years, from 10.2% in 2018 to 9.1% in 2019 and 8.1% in 2020.

By business segment, the consumer segment, including smartphones, recorded sales of 482.9 billion yuan, up 3.3% year-on-year, showing a slowdown in growth. The carrier (wired and wireless network and communication equipment) business segment increased by 0.2% to 302.6 billion yuan, while the enterprise business segment grew 23.0% to 100.3 billion yuan in sales.

By country, China generated 584.9 billion yuan, accounting for 65.6% of total sales from domestic demand. Next was the EMEA (Europe, Middle East, and Africa) region with 180.8 billion yuan in sales, followed by the Asia-Pacific region (64.6 billion yuan) and the Americas (39.6 billion yuan).

Steady Demand for ICT Components in the Post-COVID Era

Huawei expects the ICT system equipment component supply business to continue its growth trend in the post-COVID era. Huawei's core customers span six sectors: ▲5th generation (5G) communication networks ▲data communication ▲optical communication ▲Huawei Cloud ▲computing ▲storage devices.

Ken Hu said, "Huawei's ICT infrastructure strategy is the connection of connectivity and computing," adding, "According to our own survey, even during last year's pandemic, over 86% of key executives stated they would continue investing in digital transformation."

He emphasized, "By 2025, 97% of companies plan to adopt artificial intelligence (AI) technology," and noted, "In the past, digital transformation always started with marketing, but now, after the digital transformation phase, changes in business-to-consumer (B2C) business are expected to promote changes in business-to-business (B2B) business."

This content was produced with the assistance of AI translation services.