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Huawei Swivels to Software, Clean Energy as Sales Dive Again

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(Bloomberg) -- Huawei Technologies Co. pledged to step up investment in software and digital power technology, seeking to overcome U.S. sanctions that dragged sales to a fifth straight slump.

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Revenue fell 19% to 178.2 billion yuan ($28 billion) in the three months ended December, according to Bloomberg calculations based on full-year figures provided by Huawei. 2021 sales reached 634 billion yuan, the Shenzhen-based company said in a New Year message, down 29% from a year earlier.

The Chinese tech giant has seen sales tumble as the Biden administration maintained sanctions that were levied under President Donald Trump. The blacklisting cut off Huawei’s access to American-made components and technology vital for its once red-hot mobile-phone business, while several U.S. allies have also barred the use of the Chinese firm’s equipment in building their 5G networks.

With sanctions set to persist, Huawei will focus on information and communications technology (ICT) infrastructure to help different industries go digital and smart devices, according to the New Year message. It will increase investment in HarmonyOS and EulerOS, its operating systems for consumer and enterprise, while boosting spending in technology to develop clean energy and help traditional energy sectors go digital.

“The harder you strike flint, the brighter the spark,” Rotating Chairman Guo Ping said in the letter. “The road ahead is long and hard. As long as we press ahead, we will reach our destination.”

While sales fell by double-digits yet again, the pace of shrinkage slowed and revenue was actually up 32% from the September quarter. The company released several major phones over the past few months, and since early this year has accelerated a drive into less traditional sources of income from mining to agriculture to offset losses elsewhere.

Read more about Huawei’s pivot to new businesses

Huawei, a closely held firm, didn’t released detailed financial information for its various business units. Years of U.S. sanctions have strained Huawei’s smartphone business, which was once the biggest source of revenue before a series of Trump-era trade bans cut the company off from key chipsets made by an array of suppliers from Qualcomm Inc. to Skyworks Solutions Inc.

Huawei has been exploring ways to sustain a business that brought in 483 billion yuan of revenue last year. That includes licensing its handset designs to third parties as a way to gain access to critical components, Bloomberg News reported last month. The company is also exploring emerging opportunities in areas from smart mining to electric vehicles.

Read more about Huawei’s mobile partnerships

In his New Year message, Guo reiterated that Huawei will continue providing partners with incentives and support. The company also said it will “proactively” support and develop high-quality suppliers globally, as part of efforts to overcome the U.S. blacklisting.

Earlier this year, Huawei Chief Financial Officer Meng Wanzhou, the daughter of founder Ren Zhengfei, was released by Canadian authorities after a nearly three-year house-arrest during which she battled extradition to the U.S. on fraud charges.

(Updates with details of Huawei’s other businesses from sixth paragraph)

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