Benzinga | Oct 29, 2021 02:26PM EDT

US Embargo Wreaks Mayhem On Huawei

Huawei Technologies Co's revenue dropped 38% to 135.4 billion yuan, or $21.2 billion in the most recent quarter due to the U.S. embargo, the Wall Street Journal reports.

The quarter marked the former Microsoft Corp (NASDAQ: MSFT), Alphabet Inc's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google, Intel Corp (NASDAQ: INTC), Qualcomm Inc (NASDAQ: QCOM), and Facebook Inc (NASDAQ: FB) supplier's fourth consecutive quarter of revenue decline.

Huawei's net profit margin rose to 10.2% during the first three quarters, up from 8% during the same period in 2020. For the first nine months of the year, revenue fell 32% to about $71.2 billion.

Previously, Huawei turned out double-digit percentage gains in revenue and profits annually from strong sales of smartphones, networking equipment, and other gadgets. The 2020 U.S. embargo halting the shipment of high-end chips to the firm has strained its finances due to dwindling chip supply.

Huawei's consumer-product business was significantly affected in 2021, while the networking equipment and enterprise business lines remain stable.

As per Counterpoint Research, Huawei's smartphone shipments plunged 84% in Q3 displacing the firm from the numero uno position to the eleventh position within a year. "With no change in the U.S. sanctions against Huawei, the brand is expected to continue its decline," Counterpoint said.

Huawei targeted technology sales to coal mines and ports and has begun offering a lineup of electric cars running its technology at its stores across China. It has also invested in new software products, including a self-designed operating system for smartphones and internet-connected gadgets called Harmony OS.

A Huawei executive saw declining smartphone sales to cost up to $40 billion in lost revenue in 2021.