Huawei's Profit Jumps as It Makes Headway Beyond China

  • The Chinese networking giant is investing heavily on R&D
  • Huawei's also riding a global rollout of 4G networking

Huawei Technologies Inc.’s profit surged 33 percent in 2015 after the China’s largest maker of telecommunications gear grabbed market share with premium smartphones and mobile carriers expanded their high-speed networks globally.

The world’s third-largest smartphone maker ploughed 15 percent of its 2015 revenue into research, helping it make inroads into higher-end phones and develop next-generation wireless networking gear. Net profit rose to 36.9 billion yuan ($5.7 billion) last year, the company said in an e-mailed statement Friday.

Huawei, which debuted its first Android device in 2009 to complement its main networking business, is now pushing into markets from the U.S. to Europe to help offset a decelerating home market. That helped its consumer-products arm expand revenue by 73 percent to 129.1 billion yuan, its fastest-growing division.

Chief Executive Officer Guo Ping foresees sales in that unit rising about 51 percent this year to $30 billion, a spokesman for the company said.

New Ideas

In his annual letter to shareholders, Guo said Huawei needed to embrace fresh ideas in burgeoning arenas such as could computing and the Internet of Things. Virtual reality has become the talk of the town but the industry needs to wrap its head around the enormous stresses newly connected devices will place on networks, he said.

“We no longer have to take out a second mortgage to pay off a night’s worth of 4G download fees,” Guo said in his letter. “But we need to consider the possibility that a 360-degree VR movie might just stream enough data to fill the Pacific Ocean.”

Founded in 1987 by former army engineer Ren Zhengfei, Huawei is one of several Chinese smartphone makers trying to compete with Apple Inc. and Samsung Electronics Co. in a slowing market for mobile devices. Smartphone sales are expected to grow just 7 percent in 2016, dipping into single-digits for the first time according to IT researcher Gartner.

The company, which rivals Xiaomi Corp. as China’s largest smartphone maker, reported a 37 percent jump in overall 2015 revenue to 395 billion yuan. The company said before it shipped roughly 100 million smartphones globally last year.

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