Beijing – Huawei Technologies announced on Monday that its first‑half net profit fell 36% to 23.81 billion yuan ($3.54 billion). The decline reflects soaring input costs and a sharp rise in research and development (R&D) spending, which grew 25% to 121.38 billion yuan, or 25.9% of revenue.

Despite the profit drop, the company reported a 9.6% increase in revenue, reaching 467.82 billion yuan. Huawei said all of its business segments posted year‑on‑year revenue growth, underscoring a continued recovery from U.S. sanctions that had previously limited access to advanced chips and Google’s Android operating system.

Cost pressures and R&D focus

The higher cost base stems from rising memory‑chip prices that have weighed on the consumer‑business division, which includes smartphones. Huawei’s push to reduce reliance on foreign technology and expand its AI computing and chip capabilities has required substantial investment in domestic alternatives.

R&D spending now accounts for roughly a quarter of the company’s revenue, targeting AI, communications technology, smart devices and intelligent automotive solutions. Huawei said the increased R&D and changes in its business mix contributed to the lower profitability.

Outlook

Huawei’s first‑half results were in line with its internal forecasts, but the company placed its full‑year outlook under review because of external uncertainty and higher input costs. The firm highlighted its 2025 revenue of 880.9 billion yuan, the second‑highest annual total after a record 891 billion yuan in 2020.

As Huawei continues to launch AI‑focused telecom products, new computing hardware, smart‑driving technology, and a range of smartphones, tablets and wearables in China and overseas, the company remains committed to building domestic alternatives in chips, software and AI infrastructure.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.