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Huawei posts record H1 2025 revenue while trimming profits to fund long-term autonomy
Huawei reported strong top-line growth in the first half of 2025, generating 427 billion yuan (about $59.8 billion) — its highest H1 revenue since 2020. Yet the company accepted a meaningful reduction in net profit as it ramped up research and development spending to break free from critical supply-chain constraints imposed by US export controls.
Financial snapshot: revenue, profit, and R&D investment
Despite the revenue milestone, Huawei's H1 2025 net profit fell sharply, down roughly 32 percent year-over-year to 37 billion yuan (around $5.2 billion). The decline coincides with a strategic increase in R&D outlays: January through June R&D spending rose to 96.9 billion yuan ($13.6 billion), up from 88.9 billion yuan in H1 2024. In short, Huawei is sacrificing near-term margins to invest in chip design, advanced packaging, and other core technologies that support long-term competitiveness.
Why Huawei is doubling down on R&D
Sanctions introduced in 2020 cut Huawei off from many advanced tools and suppliers, forcing the firm to prioritize technology self-reliance. That strategy required higher capital allocation to semiconductor research, software development, and the development of in-house mobile platforms. The company's investment program aims to reduce dependency on external silicon, lithography, and other critical components.
Product highlight: Mate 60 and the Kirin 9000S
Huawei's resurgence in consumer headlines was driven by the Mate 60 series, which shipped with the Kirin 9000S chipset. Manufactured by SMIC on a 7nm-class process, the Kirin 9000S was a high-profile example of Huawei's push to maintain flagship-class performance despite limited access to EUV lithography tools. The Mate 60's feature set emphasizes computational photography, strong battery and power management, and integration with Huawei's HarmonyOS ecosystem.
Limitations and ongoing challenges
SMIC's current node restrictions and lack of advanced EUV tools limit Huawei's ability to develop 'state-of-the-art' chipsets across the full product portfolio. Without access to EUV lithography, chip density and power efficiency improvements are harder to achieve, affecting future product roadmaps for premium smartphones and certain telecom equipment.
Comparisons and market relevance
Compared with pre-sanctions dynamics when Huawei was on track to challenge Samsung for global smartphone leadership, the firm today is following a different path: prioritizing vertical integration and technical independence over immediate market share gains. Relative to competitors that still rely on third-party silicon and EUV-dependent supply chains, Huawei's model focuses on resilience and localized manufacturing.
Advantages of Huawei's approach
- Greater supply-chain control and reduced exposure to export restrictions
- Closer hardware-software optimization through in-house chip and OS development
- Potential long-term cost savings and differentiated products tailored to local markets
Use cases and product relevance
Huawei's investments matter across multiple use cases: flagship smartphones that need tight CPU/GPU-ISP integration, telecom infrastructure that requires custom silicon for 5G and edge processing, and IoT/enterprise devices that benefit from optimized low-power chips. The company’s focus on R&D also supports enterprise networking, cloud infrastructure, and smart vehicle platforms.
Supply chain developments and third-party partners
One notable development is partner SiCarrier's work on custom EUV-equivalent equipment. If successful, that effort could reduce industry dependence on ASML and other Western suppliers, opening a path for multiple Chinese semiconductor players to advance beyond current 7nm limits. However, such shifts will take years and significant cross-industry coordination.
Outlook
Huawei's H1 results show the trade-off between short-term profitability and strategic self-sufficiency. The company is betting that heavy R&D investment will pay off in resilience and product differentiation, enabling it to compete in smartphones, telecom gear, and cloud-edge ecosystems even under prolonged sanctions. For investors and industry watchers, the key questions are timing and technical milestones: how quickly can Huawei and its partners close the gap on advanced lithography and deliver next-generation chipsets that restore margin growth?
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