Huawei reports 15% revenue growth in 2017 as it eyes expansion into U.S. smartphone market

Huawei (Flickr)
Huawei reported 15% revenue growth in 2017.

China’s Huawei reported year-end numbers that represent the company’s slowest revenue growth rate in four years, as Reuters noted. However, the vendor’s revenue growth rate of 15% in 2017 was still far better than what rivals like Nokia and Ericsson have reported for the year.

In its year-end message, Huawei confirmed it shipped 153 million smartphones during 2017, which the company said was a 10% increase for the year and gives the company a 10% share of the global smartphone market. While that growth was also Huawei’s slowest since 2013, it firmly positions the company behind Samsung and Apple as the world’s third-largest smartphone vendor.

And Huawei is reportedly poised to enter the U.S. smartphone market next month via an agreement with AT&T to sell the company’s Mate 10 smartphone. Although Huawei has enjoyed significant success in the smartphone market in China and elsewhere, it hasn’t yet secured any major sales agreements in the United States. That’s noteworthy considering the U.S. smartphone market is one of the world’s largest and most competitive.

Sponsored By VIAVI Solutions

O-RAN: an Open Ecosystem to Power 5G Applications

NEMs and operators worldwide are adopting O-RAN to lower the barrier to entry for new product innovation and to reduce infrastructure deployment costs. Read this paper to learn about O-RAN, related standards initiatives, and the developing ecosystem.

However, Huawei’s rise in the world’s smartphone industry hasn’t been entirely smooth. According to a Reuters report, the head of sales in China for Huawei’s smartphone business was detained by police on suspicion of accepting bribes. "The authorities are investigating the matter, and we defer to their discretion as to what can be disclosed," the company told Reuters, without offering details. "We take our business ethics extremely seriously, and have zero tolerance for corrupt behavior."

According to an internal company memo obtained by Reuters, Huawei’s Teng Hongfei has been detained for "the suspected crime of accepting bribes as a non-state functionary.”

Despite some contracts with smaller carriers, Huawei has also been largely blocked from the U.S. infrastructure market since a 2011 U.S. government report recommended U.S. companies avoid using equipment from Chinese vendors Huawei and ZTE due to national security concerns.

That situation doesn’t appear to have affected the company’s global position in the network infrastructure market: “In 2017, despite fluctuations in telco investment cycles, our carrier business has remained healthy and robust,” Huawei’s Ken Hu wrote in the company’s end-of-the-year report. “As markets waver, we are more committed than ever to exploring better solutions with our customers as they shift away from network construction models that are investment-driven, to models driven by value.”

Hu didn’t offer any specific numbers for Huawei’s carrier business—which is still the company’s largest unit, just ahead of its smartphone business—but he did say that the company would continue to sell products for 5G and cloud networks. “As we look to the future, emerging technologies like 5G, IoT, cloud computing, and artificial intelligence will soon see large-scale commercial application. All industries have dived into the digital deep end, and an intelligent world is just around the corner,” Hu wrote.

For 2018, Huawei’s Eric Xu said the company would in part focus on sustain profitable growth and maintaining healthy cash flow. “The key to this is to improve quality, especially the quality of our contracts and operations. Huawei has realized double-digit revenue growth over the past few years. That said, there has not been much improvement in our operating efficiency and cash flow,” he wrote in his own year-end report.