Few companies can afford to invest to overcome US sanctions on a scale that Huawei can afford. One of China’s largest tech giants has committed $22.1 billion to research and development in 2021, more than any company outside of America. Huawei simply had no other choice amid US sanctions.
Over the past five years, Huawei has almost doubled its R&D investment, accounting for 22.4% of its revenue in 2021—nearly twice as much as a percentage of revenue than Amazon or Alphabet spent and more than three times as much as Apple. According to Bloomberg, only Meta allowed itself to spend 20.9% of its income on similar purposes. Rising costs demonstrate Huawei’s determination to survive at all costs by developing chips, networking equipment, and even smartphones amid sanctions without US technology. Restrictions on the company have been in place since 2019 when Washington accused it of endangering US national security. Due to sanctions, Huawei‘s revenue in 2021 fell by about a third.
Huawei spent $22 billion on research in 2021 as the company resists US sanctions
China’s largest tech giant almost doubled its R&D budget over the past half-decade to $22.1 billion in 2021 — more than any company in the world outside America. That’s 22.4% of its sales that year: nearly double Amazon.com Inc.’s and Google-owner Alphabet Inc.’s proportions and more than triple iPhone-maker Apple Inc.’s. Only Meta Platforms Inc. came close among the so-called Faang contingent with 20.9%, data compiled by Bloomberg shows.
According to the company, Huawei‘s real value lies in its ability to conduct research and development with long-term investment. Huawei was one of six companies in the world to spend more than $20 billion; on research and development last year. This strategy pays dividends – in the same period, the company filed 2,770 patents in the US alone, ranking fifth in the country.
While sanctions imposed under the presidency of Donald Trump dealt a devastating blow to Huawei’s smartphone business; and led to a ban on its 5G equipment in many regions; it has taken a number of measures to deal with the crisis; including the sale of Honor, which produced popular smartphones under its own brand. And spinning off the x86-compatible server business into a separate consortium.
Bottom line
We know that in 2021, Huawei had 195,000 employees; of which 107,000 or 55% were engaged in research and development. An exact comparison with other companies is impossible due to a different approach to assessing the functions of personnel; but, for example, according to Microsoft, it employs 60,000 people or a third of the state in a similar segment.
According to a Huawei representative, today the company’s problems cannot be solved simply by reducing costs; since the company cannot acquire modern technologies, it should increase investment in the development of its own solutions.
Source: Bloomberg
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