Telecom | Huawei will ramp up R&D as first-half sales quicken

Huawei Technologies Co.’s revenue growth accelerated in the first half as upgraded smartphones and network gear helped China’s largest vendor of telecommunications equipment counter deteriorating global demand.
The world’s third-largest smartphone brand grew revenue 40 percent to 245.5 billion yuan (USD37 billion) in the first six months, the Shenzhen-based company said in a statement. That’s up from the 30 percent growth it managed in the first half of 2015.
Founded in 1987 by former army engineer Ren Zhengfei, Huawei has sprung to the vanguard of a crop of Chinese smartphone vendors trying to compete with global leaders Samsung Electronics Co. and Apple Inc. The company used its business of selling networking gear to bankroll an expansion into premium phones, becoming China’s biggest mobile label last year. It plans to sustain its pace of investment in research as carriers prepare to build fifth-generation broadband networks in coming years.
Competition, however, is weighing on profitability. Huawei’s operating margin came to 12 percent in the first half, narrowing from 18 percent in the same period last year. Global smartphone vendors are scrabbling to safeguard their share of a market going through its worst downturn on record, as Western markets mature and China, the biggest by users, flatlines after years of industry-supporting growth.
Huawei is “one of the few vendors that we’re expecting to grow, at least in the smartphone space, quite significantly this year,” said Bryan Ma, vice president of client devices research at IDC, told Bloomberg Television. But “there is quite a bit of competition. You’ve got local vendors in China, Oppo and Vivo, being examples of local vendors that are arguably even more aggressive than they are.”
Huawei didn’t break out the performance of individual units of a business that also encompasses cloud computing and enterprise services. Its Consumer Business Group, which sells phones, watches and laptops, is scheduled to announce results today. That unit chalked up 73 percent sales growth in 2015 to 129.1 billion yuan, out of the corporation’s total revenue of about 395 billion yuan.  David Ramli, Bloomberg