Huawei net profit drops 36% amid surging R&D investment

Huawei Technologies reported a 36 percent decline in net profit for the first half of 2026, totaling approximately 23.8 billion yuan ($3.54 billion). Despite the drop in earnings, the company's revenue grew by roughly 9.6 percent to reach 467.8 billion yuan ($69.6 billion).

The decline in profitability is primarily attributed to a massive surge in research and development (R&D) spending, which rose by over 25 percent to 121.4 billion yuan. This investment represents nearly 26 percent of the company's total revenue and is directed toward artificial intelligence, semiconductors, telecommunications, and smart devices.

Additional financial pressures include rising costs for raw materials and memory chips, which have impacted the smartphone and business segments. The company is also navigating the long-term effects of U.S. sanctions, which have limited its access to advanced semiconductor manufacturing equipment. In response, Huawei is pursuing architectural innovations, such as its LogicFolding technology, to develop high-performance chips that aim to compete with industry leaders despite restricted access to advanced lithography tools.