Huawei Dials Up 28% Profit Gain

Huawei Technologies Co. Ltd., the world’s largest supplier of equipment for telecom carriers, saw net profit jump 28.1% last year on strong performance from its home market, as well as its consumer and enterprise businesses.

Net profit totaled 47.5 billion yuan ($7.3 billion), according to its annual report released Friday. This is a strong rebound from 2016, when its net profit remained flat from a year earlier due to spending on smartphone marketing and new stores opening to secure market share.

Revenue expanded 15.7% last year to 603.6 billion yuan, boosted by China’s operations, for which it reported year-on-year revenue growth of 29％. This outperformed its second-largest market EMEA (Europe, the Middle East and Africa), which expanded 4.7%.

Huawei, which has close ties with local carriers, attributed its strong revenue growth in China to “ongoing 4G network rollout, sustained growth in the smartphone sector and growing capabilities in enterprise and industry solutions.”

Its carrier business accounted for 49.3% of total revenue last year. Smartphone business made up 39.3%, while its enterprise business which includes cloud services contributed 9.1%.

Huawei said it shipped a total of 153 million smartphones in 2017, securing more than 10% of the global market share. It currently ranks third, after Samsung Electronics and Apple Inc.

The Shenzhen-based giant surpassed Sweden’s Ericsson AB last year to become the world’s top manufacturer of telecom equipment.

Research firm IHS Markit said that of the top five telecom equipment-makers — which also includes Nokia Oyj, ZTE Corp. and Samsung Electronics — Huawei was the only one to increase market share in 2017.

The company however continues to face headwinds in the U.S., which is concerned about its links to the ruling Communist Party and the Chinese military.

After a deal with U.S. wireless carrier AT&T fell through early this year, the largest consumer electronics retailer Best Buy Co. Inc. is reportedly pulling Huawei’s phones from its shelves.

Contact reporter Jason Tan (jasontan@caixin.com)