Huawei posts first quarterly loss in years amid AI and R&D push

Huawei Technologies Company reported its first quarterly net loss in years due to spending heavily on research in chips and electric vehicles. At the same time, the company’s overall business slowed.

The company has invested heavily in projects like EV software because several U.S. sanctions have limited its access to critical technologies.

Huawei benefits from Huawei Cloud since the latest Nvidia GPUs are too expensive for Chinese consumers

When Huawei introduced its own in-house operating system and started to compete domestically with Nvidia Corp. on AI server chips last year, it made a significant step in chipmaking and smartphones.

In 2024, the consumer business group, which includes laptops, wearables, and phones, grew by 38%. According to industry research firm IDC, Huawei smartphones grew by more than 20% in the Chinese smartphone market during the most recent quarter, while Apple saw a drop.

As China’s post-DeepSeek growth was driven by the need for AI, the cloud computing division expanded by 8.5% in 2024. Due to U.S. sanctions, Huawei has profited since Chinese consumers could not purchase cutting-edge Nvidia GPUs.

Based on annual results,  the Shenzhen-based networking and electronics leader reported a 9.5% increase in revenue to roughly 276 billion yuan, worth $38.1 billion in the December quarter.

This comes after double-digit increases due to the increasing demand for its Mate devices at the expense of Apple Inc.

According to the company, in 2024, it invested 179.7 billion yuan in research and development, up 9.1% from 2023 and roughly a fifth of total revenue.

However, compared to a net profit of 13.9 billion yuan a year ago, when the company reported gains from previous asset sales, it reported a net loss of roughly 300 million yuan for the most recent quarter. In 2020, it sold Honor Device Co.; in 2021, it sold off a portion of its server arm.

Thanks to China’s quick adoption of electric vehicles, automakers’ smart driving solutions industry turned a profit for the first time last year. Revenue increased more than fivefold.

Moreover, earlier this month, Bloomberg revealed that the Jack Ma-backed Ant Group Company trained its models using Chinese semiconductors, including the ones Huawei manufactured.

Huawei saw a 28% decline in profits last year amid economic uncertainty

Huawei recently reported a 28% drop in annual profits last year, citing weak domestic consumption and global economic uncertainty as key factors.

The company has long been at the center of a geopolitical dispute between China and the U.S. Since Washington raised concerns that Huawei’s equipment could be used for espionage—a claim the company denies—tensions have escalated.

U.S. restrictions imposed in 2019 barred Huawei from accessing American-made components and technologies, forcing the Shenzhen-based firm to overhaul its growth strategy.

According to recent reports, the firm’s net profit for 2024 fell to 62.6 billion yuan, down from 87 billion yuan in 2023.

In a statement, a Huawei spokesperson said profits slipped last year because ” future-oriented investment continued to increase, and there were no gains from the sale of businesses.”