LDN - Business

Huawei's third-quarter revenue jumps 27% as smartphone sales surge

[October 16, 2019] By David Kirton and Brenda Goh

SHENZHEN, China/SHANGHAI (Reuters) - Huawei Technologies Co Ltd's third-quarter revenue jumped 27%, driven by a surge in shipments of smartphones launched before a trade blacklisting by the United States expected to hammer its business.

Huawei, the world's biggest maker of telecom network equipment and the No. 2 manufacturer of smartphones, was all but banned by the United States in May from doing business with American companies, significantly disrupting its ability to source key parts.

The company has been granted a reprieve until November, meaning it will lose access to some technology next month. Huawei has so far mainly sold smartphones that were launched before the ban.

Its newest Mate 30 smartphone - which lacks access to a licensed version of Google's <GOOGL.O> Android operating system - started sales last month.

Huawei in August said the curbs would hurt less than initially feared, but could still push its smartphone unit's revenue lower by about $10 billion this year.

The tech giant did not break down third-quarter figures but said on Wednesday revenue for the first three quarters of the year grew 24.4% to 610.8 billion yuan.

Revenue in the quarter ended Sept. 30 rose to 165.29 billion yuan ($23.28 billion) according to Reuters calculations based on previous statements from Huawei.

"Huawei's overseas shipments bounced back quickly in the third quarter although they are yet to return to pre-US ban levels," said Nicole Peng, vice president for mobility at consultancy Canalys.

"The Q3 result is truly impressive given the tremendous pressure the company is facing. But it is worth noting that strong shipments were driven by devices launched pre-US ban, and the long-term outlook is still dim," she added.

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A Huawei logo is pictured at their store at Vina del Mar, Chile July 18, 2019. REUTERS/Rodrigo Garrido/File Photo

"STRONG PERFORMANCE"

The company said it has shipped 185 million smartphones so far this year. Based on the company's previous statements and estimates from market research firm Strategy Analytics, that indicates a 29% surge in third-quarter smartphone shipments.

Still, growth in the third quarter slowed from the 39% increase the company reported in the first quarter. Huawei did not break out figures for the second quarter either, but has said revenue rose 23.2% in the first half of the year.

"Our continued strong performance in Q3 shows our customers' trust in Huawei, our technology and services, despite the actions and unfounded allegations against us by some national governments," Huawei spokesman Joe Kelly told Reuters.

The U.S. government alleges Huawei is a national security risk as its equipment could be used by Beijing to spy. Huawei has repeatedly denied its products pose a security threat.

The company, which is now trying to reduce its reliance on foreign technology, said last month that it has started making 5G base stations without U.S. components.

It is also developing its own mobile operating system as the curbs cut its access to Google's Android operating system, though analysts are skeptical that Huawei's Harmony system is yet a viable alternative.

Still, promotions and patriotic purchases have driven Huawei's smartphone sales in China - surging by a nearly a third compared to a record high in the June quarter - helping it more than offset a shipments slump in the global market.

(Editing by Edwina Gibbs and Deepa Babington)

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