On April 30th, Huawei Investment & Holding Co., Ltd. disclosed its operating performance for the first quarter of 2024. During this period, the company achieved an operating revenue of approximately 178.45 billion yuan, a year-on-year increase of 36%; the net profit attributable to the parent company was about 19.65 billion yuan, a year-on-year increase of about 564%, with a net profit margin of 11%.

In contrast, during the first quarter of the previous year, Huawei's sales revenue was 130.5 billion yuan, with a net profit margin of only 2.3%, which was the lowest in a decade.

Huawei did not disclose the specific revenue of each business segment this time. However, looking at the annual report data for 2023, the terminal business has become an important support point for Huawei's profit growth at this stage.

In terms of terminal revenue, Huawei has experienced significant fluctuations in recent years, once falling from 483 billion yuan to 214.5 billion yuan. Last year, Huawei's terminal business revenue was 251.5 billion yuan, returning to a growth channel for the first time in three years.

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According to a report from the consulting firm Counterpoint Research, Huawei's smartphone shipments in 2023 were about 35 million units, an increase of about 5 million units from 2022. In the industry's view, calculated at an average price of 6,000 yuan, this business increased revenue by about 30 billion yuan, becoming the main force to reverse the growth trend of Huawei's terminal business revenue.

In the recently released first-quarter domestic smartphone report, calculated by shipments, Honor and Huawei have tied for first place in the Chinese smartphone market, with Huawei capturing a 17% market share, a year-on-year increase of 110%. IDC reported that the Mate 60 series and Nova 12 series released last year also indirectly raised the overall profit level of Huawei's smartphones.

TF International Securities analyst Ming-Chi Kuo predicted that compared to the P60 series released in 2023, the P70 (Pura70) series shipments will see a significant increase in 2024. If the demand for mobile phone inventory replenishment is strong, the series shipments are expected to grow by 230% to 13-15 million units; if the demand slows down, it is also expected to grow by 150% to 10-12 million units.

In addition to the terminal business, the reduction in losses in the automotive segment has also driven the overall profit increase of Huawei. Yu Chengdong, CEO of Huawei's Terminal BG, previously stated: "Huawei's car BU used to lose 10 billion yuan a year, then 8 billion yuan, and last year it lost 6 billion yuan, and this year it is expected to achieve a profit."

Furthermore, according to the reporter's understanding, Huawei's enterprise business in China is currently one of the few businesses of the company that can ensure double-digit growth and also carries higher expectations for growth. Wu Hui, President of Huawei's enterprise business in China, said to reporters including those from First Financial in March this year that the growth target for the business in 2024 is 30%. By 2025, the revenue target for Huawei's enterprise business in China is 260 billion yuan.

However, from a sustainable development perspective, Huawei still faces challenges brought by a complex external environment. From the normalization of sanctions to normal operations, from survival to development, how Huawei builds a more resilient supply chain capability and ensures high-quality business continuity and product competitiveness is the core of its future sustainable development.Taking smartphones as an example, a supply chain insider told the reporter that Huawei has become stable in the release cycle of its flagship models. However, under supply pressure, Huawei's recovery in high-end smartphones still requires time. It is not an easy task to create a price gap with other competitors and extend the life cycle of the high-end product line. In terms of ecosystem development, Huawei is still promoting the implementation of HarmonyOS, Kunpeng, and Ascend, but moving from "usable to good to use" still requires more ecosystem partners to jointly invest.

Huawei's Deputy Chairman and Rotating Chairman, Xu Zhijun, said at the analyst conference held in mid-April, "The ecosystem is crucial to Huawei's industrial development. Huawei has decided that in 2024 and the next five years, it will make strong strategic investments in the development of the ecosystem, and through the development of the ecosystem, it will drive and promote the development of the terminal and computing industries."