1. Huawei is on track to surpass its record annual revenue this year, a recovery driven by heavy investment in AI and its homegrown operating system. [para. 1]
2. Huawei generated 467.8 billion yuan ($70 billion) in revenue in the first half of 2026, up 9.6% year over year. Market estimates put it on course to exceed 900 billion yuan in annual sales for the first time, eclipsing the previous record of 891.4 billion yuan set in 2020 before U.S. sanctions hit its smartphone and telecom businesses. [para. 2]
3. The recovery has been costly: Since 2021, Huawei has spent more than 20% of annual revenue on R&D, rising to 25.9%, or about 121.4 billion yuan, in the first half of 2026. Net profit attributable to shareholders fell over 30% to 23.4 billion yuan during the period. [para. 3]
4. The investments are transforming Huawei from a telecom equipment and smartphone maker into an integrated technology company spanning AI chips, computing infrastructure, cloud services, operating systems, and energy systems. However, its resurgence remains heavily dependent on China and domestic supply-chain efforts, while U.S. restrictions, European security concerns, and competition persist overseas. [para. 4][para. 5]
5. AI computing has become Huawei’s most consequential shift, with Ascend processors and large-scale systems emerging as alternatives to Nvidia. In the first half of 2026, Huawei shipped 572,000 AI chips in China, capturing 28% of the market versus Nvidia’s 34%. Huawei’s computing business research spending exceeded its wireless business spending for the first time. [para. 7][para. 8]
6. Lacking access to advanced semiconductor manufacturing, Huawei uses “SuperPoDs” connecting less powerful chips through high-speed links. Its Atlas 900 A3 system, launched in 2025, connects 384 Ascend 910C processors and had over 1,000 deployments by September 2026. A system supporting up to 1,024 Ascend 950 chips has entered commercial use, with 165 installations. [para. 9][para. 10]
7. SuperPoDs can cost more than 100 million yuan apiece and are aimed more at strengthening China’s technological self-reliance than immediate returns. Customers already include DeepSeek, ByteDance, and Meituan. DeepSeek has adapted its R1 model to Ascend infrastructure, released open-source components for the platform, and plans to use Huawei systems for future training. [para. 11][para. 12][para. 13][para. 14]
8. Huawei’s planned Ascend 960 system, expected in 2027, will connect up to 4,096 chips and deliver a theoretical 16 exaflops at FP4 precision, compared with 1.44 exaflops for Nvidia’s GB300 NVL72, though with substantially more chips. Risks include system complexity, rising failure rates, and economics that depend on demand for such scale. Production constraints also remain: Huawei shows no sign of prioritizing AI processors over smartphone chips, and Rotating Chairman Xu Zhijun said future supply may be the key limitation. [para. 15][para. 16][para. 17][para. 18]
9. Software is another challenge. Huawei’s traditional tightly controlled systems contrast with AI developers’ demand for hardware and programming-tool access. Huawei has therefore settled on an AI strategy centered on computing hardware backed by a more open software ecosystem, while acknowledging it has fallen behind leading large-language-model developers but still sees opportunities in industry-specific AI applications. [para. 19][para. 20][para. 21]
10. HarmonyOS, Huawei’s second major bet, is expected to run on more than 100 million devices by the end of 2026, a milestone deemed essential for a viable alternative to Android and iOS. HarmonyOS held 24% of China’s smartphone operating-system market by sales in the second quarter, up 7 percentage points, with a 5% global share. By August, Huawei had over 100,000 native HarmonyOS applications and users could access more than 400,000 in total. [para. 23][para. 24][para. 25][para. 26]
11. This marks a turnaround from 2024, when Huawei’s native HarmonyOS abandoned Android app compatibility, forcing developers to build separate versions. Huawei responded with subsidies, training, and university partnerships, pledging more than 6 billion yuan annually in 2024 and launching a 1 billion yuan incentive program in 2025. [para. 27][para. 28][para. 29]
12. AI coding tools introduced in June have accelerated development. Kuaishou said AI generated 80% of its HarmonyOS code and improved development productivity by 70%; an independent developer said a three-person team used free AI tools to maintain over 10 applications and double revenue. Registered HarmonyOS developers reached 11 million by September, up 1 million from December 2025. [para. 30][para. 31][para. 32][para. 33]
13. Huawei believes 100 million users will create a self-sustaining ecosystem and a “virtuous cycle” for developers. It is also extending its technology through OpenHarmony, an open-source operating-system project backed by the OpenAtom Foundation. [para. 34][para. 35]
14. Overseas growth remains elusive. Overseas markets accounted for 48.4% of Huawei’s revenue in 2018, but by 2025 that share had fallen to roughly 30%. Yet about 95% of Huawei’s additional revenue in 2025 came from overseas, as China’s sales grew only 0.2%. [para. 37][para. 38][para. 39]
15. Huawei’s telecom business still benefits from network upgrades and 5G deployments in emerging markets, but Europe is a major uncertainty. In January 2026, the European Commission proposed requiring telecom operators to phase out equipment from designated high-risk suppliers within 36 months. Germany has already agreed to remove key Huawei and ZTE components from 5G core networks by end-2026 and certain network-management functions by 2029. [para. 40][para. 41][para. 42]
16. Huawei’s smartphone shipments were broadly flat in 2025, about 4% of the global market, with China representing 94% of those shipments. The absence of Google Mobile Services and popular international apps remains a major obstacle for HarmonyOS overseas. Xu said the “true sign of success for a new ecosystem is its ability to go global and secure a place in international markets.” [para. 43][para. 44][para. 45][para. 46]
17. Geopolitical restrictions are spreading beyond telecom. New U.S. Federal Communications Commission rules took effect Oct. 13, extending equipment-authorization restrictions to products containing components from Huawei and other restricted-list companies. Nine days later, U.S. authorities denied certification to a dashboard camera and a wireless video transmitter because they contained Huawei’s HiSilicon chips. [para. 47][para. 48][para. 49]
AI generated, for reference only
Sign in with Google
Sign in with Facebook
Sign in with 财新