Huawei’s 2024 Net Profit Drops 28% Due R&D Investment Increase

Huawei Technologies reported a 28% decline in net profit during 2024, reaching US$8.62 billion, down from US$11.99 billion in the previous year. This result is mainly attributed to the increase in R&D expenses. Despite the drop in profits, the company reported a 22% increase in revenues, consolidating its third consecutive year of growth.

Sabrina Meng, CFO, Huawei, says that the financial results "are in line with expectations." Meng argues that the company's strategy prioritizes innovation and quality, even at the cost of lower margins in the short term. She also reveals that during 2025, Huawei will continue to apply its “Success through Quality” approach to all of its management systems and business activities. 

The contraction in Huawei's net profits reflects a deliberate effort to strengthen its technological competitiveness in a highly regulated global market. Since 2019, US-imposed sanctions have limited its access to critical supply chains, initially affecting its mobile device division. In response, the company has redirected resources toward the development of autonomous technologies, such as its HarmonyOS operating system and devices with proprietary architecture.

In 2024, Huawei launched its first foldable smartphone in three segments and consolidated its position in the Chinese market, where it competes directly with Apple. Data from Canalys reveals that, in 4Q24, Huawei achieved a 16.7% market share in smartphone shipments in China, just 0.1 percentage points below Apple’s 16.8%. 

Huawei's R&D investment in 2024 amounted to US$24.76 billion, a record for the company. This amount exceeds the percentage allocated by global competitors such as Alphabet (15% of revenue) or Microsoft (13%). IDC analysts point out that such spending seeks to reduce dependence on Western technologies and accelerate the commercialization of enterprise solutions, such as 5G networks and cloud computing.

Although annual revenue grew 22%, driven by the digital infrastructure and smart energy divisions, the sale of non-strategic assets, such as its former Honor division, stopped bringing in recurring revenue. This exacerbated pressure on margins. Nevertheless, the company maintains solid liquidity, with operating cash flow of US$6.8 billion.

In 2025, Huawei is expected to increase its focus on B2B markets, especially in AI and vehicle electrification deployments. Consultants such as Gartner project that demand for enterprise solutions in these areas will grow by 18% annually in Asia-Pacific, a niche where the company already has partnerships with automakers and governments.