Huawei reported “steady operations throughout 2022,” today with $92.3 billion (CNY642.3 billion) in revenue and $5.11 billion (CNY35.6 billion) in net profits. At the same time, the company said it doubled down on R&D investment with an annual expenditure of $23.2 billion (CNY161.5 billion) in 2022, representing 25.1% of the company's annual revenue.
Huawei’s $23.2 billion investment in R&D is up over 2021 when it spent roughly $22 billion on R&D. Comparatively, Cisco spent around $6.8 billion in 2022 according to its earnings reports.
Huawei used to rank at the top of R&D spending among tech with companies like Meta and Microsoft spending much less.
However, in 2022, Meta Platforms’ annual R&D expenses for 2022 were $35.338 billion, up from $24.655 billion 2022.
Microsoft R&D expenses for the 12 months ending December 31, 2022 were $26.627B, a 19.68% increase year-over-year. Microsoft annual research and development expenses for 2022 were $24.512B, a 18.32% increase from 2021.
Where Huawei’s R&D is likely to pay dividends is in the patent race where according to the World Intellectual Property Organization (WIPO), Huawei was still the most prolific patent filer in 2022, with well over 7,600 to its name.
Huawei’s investment in R&D is part of a “collective prioritization” across the board and includes digital technologies, developing sustainable “green” solutions and new business opportunities, according to Huawei’s Chief Security Officer Andy Purdy who spoke to Silverlinings shortly after the report.
“The business has stabilized and is steady and there is an emphasis on quality in this new normal for us,” he said. “Given the uncertainty in the market, there is no sure thing, and we have to work hard.”
Areas of focus for the company include ICT infrastructure, smart devices, cloud, digital power and intelligent automotive solutions. A company representative stated in an email that Huawei's "ongoing, heavy investment in R&D has enabled us to keep moving forward with efforts to replace components, redesign boards, and develop operating systems, databases, etc."
Purdy also noted that the company will continue its push toward 5.5G and 6G in order to increase capacity to meet the “10-fold increase in number of connections,” expected as businesses increasingly rely on machine-to-machine and artificial intelligence technologies to increase efficiency, safety and productivity.
Huawei is also undertaking efforts in partnering when it comes to health care, smart ports, mining, electric power and smart payments, among others, according to Purdy.
Results in line with expectations
The company’s financial results were in line with expectations according to CFO Sabrina Meng (see slide below).
Still, 2023 will be crucial to the company, said Purdy.
Purdy’s comment echoed CEO Eric Xu’s statement, who said this year will be key to Huawei's sustainable survival and development.
“A challenging external environment and non-market factors continue to take a toll on Huawei's operations. In the midst of this storm, we have kept racing ahead,” he said. “We will continue to drive progress, inspire passion across the organization, and further hone our capabilities. We will also proactively improve the business environment and more effectively manage risks. This is the only way we can lay a solid foundation for Huawei's future.”
This story was updated with additional information provided by a Huawei representative on 2:06 pm ET 3/31/2023.