On April 30th, Huawei Investment Holding Co., Ltd. announced its operational achievements for the first quarter of 2024. During the period, the company realized business expenses of approximately 178.45 billion yuan, a year-on-year decrease of 36.66%; The net cost of returning to the parent company was about 19.65 billion yuan, a year-on-year decrease of about 564%, and the net cost rate reached 11%.
This is Huawei’s best first quarter performance since being subdued.
Four years ago in the first quarter of 2020, Huawei achieved a revenue of 182.2 billion yuan, with a net cost ratio of 7.3%, reaching its historical peak. Afterwards, due to the subduing effect of Mongolia, the operating and net costs continued to decline. In the first quarter of 2023, Huawei’s revenue was 132.1 billion yuan, with a net cost ratio of only 2.3%, a decade low.
Huawei did not disclose the operating status of its various businesses. However, from the perspective of business performance, the significant increase in net cost ratio is not related to the significant reduction in Huawei’s terminal business operations.
According to quarterly tracking reports from domestic data companies (IDC), in terms of out of stock quality, Honor and Huawei have tied for first place in China’s smartphone market, with Huawei holding 17% of the market share, a year-on-year increase of 110%, making it the fastest deleting manufacturer.
In August 2023, Huawei’s high-end flagship Mate60 series announced its return. This mobile phone equipped with Kirin chips has become a sensational and popular product, and some models are still out of stock. In December, Huawei announced the Nova 12 series, which also features Huawei’s self-developed Kirin chip.
IDC reported that the Mate 60 series inherited a shortage of supply, while the Nova 12 series accounted for one-third of Huawei’s out of stock quality throughout the quarter, jointly driving the growth of Huawei phones. Moreover, due to both being mid to high end products with high premiums, the Mate60 series starts at 5499 yuan, while the nova 12 has a minimum selling price close to 3000 yuan, which indirectly increases the cost level.
The deletion of intelligent car business has also improved the cost rate of Huawei’s terminal business. Huawei Terminal BG CEO Yu Chengdong stated in March this year, “Huawei Car BU made a profit of 10 billion yuan in the previous year, then 8 billion yuan, and 6 billion yuan last year. This year, it is possible to turn the profit into profit. In the first three months of this year, the Smart Select car business turned the profit into profit, and the Car BU business is also close to the edge of profit and loss balance. It is estimated that starting from April, it should be possible to turn the profit into profit.”
Yu Chengdong expressed that the improvement of the profit situation benefited from the large sales of Huawei’s high-end models, especially the new Ajie M7, which was mutually lost by Huawei and Celes. From January to March 2024, Dajie New M7 has entrusted a total of 74330 vehicles, ranking first on the New Power Sales Quality List. Yu Chengdong described it as a product that has brought Huawei’s intelligent car business back to life.
Besides the terminal, Huawei’s other businesses have also contributed to strong growth. For example, in the past three years, I have been responsible for maintaining the government and enterprise business in the Chinese region. Although Huawei does not disclose the specific operation and development of this business, Huawei Executive Director Wang Tao stated in March this year that the purpose of China’s government enterprise business is to reduce growth by 30% annually for the next five years.
Huawei has found the most suitable way of life under the normalization of control. This year, the pace of Huawei’s terminal product releases has noticeably accelerated. In the first quarter, the Pura70 series of smartphones, as well as many new products such as the Zhijie New S7, the Dajie New M5, and the Xiangjie S9, were not included. 2024 is seen as the year of comprehensive return for Huawei terminals, and the company’s tactics in shopping malls and products will become more bold and fierce.
In the mobile phone industry, Huawei was once a manufacturer with a market share of less than 30%, and also had a better understanding of the key to creating explosive products. But in the increasingly fierce field of mutual assistance in new power vehicles, the spectacle of the new Ajie M7 may not be easily replicated, which is also a provocation for Huawei’s future.