Chinese telecoms giant Huawei has been hit with its largest ever fall in revenue, down 29.4% in the first half of 2021 compared to H1 2020.

The company saw its revenues dip to 320 billion yuan (£35.5 billion). In particular, the company’s consumer electronics department was hit by a 47% fall in revenue. Its telecoms arm also suffered a decline on the back slow 5G rollout in China.

However, the company noted that there was growth in its cloud services and enterprise sectors, though this is a relatively small part of the company. In addition, efficiency gains had helped push up Huawei’s profit margins to 9.8%.

The decline has been pinned on the effects of sanctions from Western governments, including the US and UK. These include preventing Huawei from importing vital components and from participating in countries’ 5G infrastructure.

The sanctions were imposed over concerns about the role the Chinese Government plays in the company.

In response, Huawei entered negotiations to sell portion of its mobile phone handset business, its premium brands P and Mate. Sales of these phones brought in yearly sales of around $40 billion for Huawei.

Huawei has also blamed the ongoing global chip shortage for hitting its sales. This has seen the number of semiconductors available on the global market fall, driven in part by the coronavirus pandemic, which drove up demand for devices while curtailing production.

“We’ve set our strategic goals for the next five years. Our aim is to survive, and to do so sustainably,” Huawei’s Rotating Chairman Eric Xu said in a statement.

“Despite a decline in revenue from our consumer business caused by external factors, we are confident that our carrier and enterprise businesses will continue to grow steadily.”

Huawei’s Fall

As Huawei’s position in the global telecoms industry grew, so did the scrutiny facing the company. It was just over a year ago that the company overtook Samsung to become the top-selling smart phone brand in the world by number of phones shipped.

Rival Chinese company Xiaomi has since filled the gap left by Huawei, as it sold the most phones in the world this June.

But it was the company’s prominence in the 5G sector that was controversial. The company made a major investment in the technology, estimated at around $12 billion by 2017, and by an additional $800 million in 2018. As such, as a major supplier of 5G kits and holder of some of the key patents that underpin the technology, it was well-positioned to benefit from a global push to use 5G.

However, this came as many Western governments grew concerned about the company’s links with the Chinese Communist Party. A Parliament Defence Committee report warned that the Chinese Government was financing the company. Not only did this help Huawei outprice its competitors, it raised concerns that the company would have to comply with Chinese national security laws.

Western governments were ultimately uneasy about allowing a potentially hostile foreign government to gain control of critical telecommunications infrastructure.

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It also coincided with the administration of former US President Donald Trump, who used sanctions against Huawei as a key component in his policy of being tough on China. These included export bans aimed to stop the company from buying essential materials.

In addition, the US actively put pressure on the UK to ban Huawei from its networks. Despite a 20-year history in the UK, the government banned the installation of new Huawei 5G kits from September this year, and all existing equipment needs to be removed by 2027.

In addition, Sweden banned the company from helping build its 5G network.

While Trump may be out of office, scepticism of China, and large Chinese companies, remains high in the US and its allies. While the administration of current US President Joe Biden is currently reviewing its policy to China, it did not comment on a recent letter from 30 organisations calling for his government to scrap Trump-era tariffs and sanctions.