Huawei Reports Smaller Profit in H1 2025 Despite Highest Revenue Since 2020 Due to Increased R&D Spending

In 2020, the imposition of U. S.trade sanctions severely impacted Huawei, an enterprise previously poised to surpass Samsung as the leading smartphone manufacturer within a few years. These export controls forced Huawei into a challenging predicament, compelling the company to significantly ramp up its research and development (R&D) investments to secure its long-term viability. Unfortunately, this aggressive strategy has taken a toll on its profit margins, leading to diminished net earnings in the first half of the fiscal year.

Huawei Faces a Significant 32% Profit Decline in Pursuit of Self-Sufficiency

On the revenue front, Huawei reported a notable achievement, generating 427 billion yuan (approximately $59.84 billion) in the first half of 2025—its highest earnings since 2020. This resurgence is prompting critics to reassess their earlier skepticism regarding the company’s future. However, this recovery has come with challenges: as highlighted by a Reuters report, the company’s profit plummeted by 32% in this same period, primarily due to its significant investments in R&D aimed at navigating the ongoing U. S.sanctions.

During this period, Huawei’s net profit amounted to 37 billion yuan (around $5.17 billion).The firm’s investment in R&D surged to 96.9 billion yuan ($13.58 billion), up from 88.9 billion yuan ($12.46 billion) in the corresponding half of 2024. This proactive approach bore fruit with the launch of its flagship Mate 60 smartphone series, which features the Kirin 9000S chipset produced using SMIC’s 7nm manufacturing process. The introduction of this device ignited lively discussions within the tech community, particularly regarding allegations from the U. S.government asserting that Huawei contravened trade sanctions to foster its in-house chip development.

At present, Huawei is hindered by a lack of access to superior extreme ultraviolet (EUV) lithography equipment, limiting its capacity to develop advanced chipsets across various product categories. SMIC, China’s largest semiconductor manufacturer, is currently restricted to 7nm technology. Nevertheless, hope remains as Huawei collaborates with its partner SiCarrier, which is actively developing custom EUV tools. This initiative not only promises to benefit Huawei but also offers a potential pathway for numerous companies seeking to lessen their dependence on foreign suppliers like ASML, thereby enhancing their technological independence in the face of escalating geopolitical tensions.

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