Chinese tech giant Huawei is significantly increasing its investment in research and development (R&D) despite a drop in net profits. According to a report released on August 31 through the Beijing Financial Assets Exchange, Huawei's revenue for the first half of 2026 reached 467.8 billion yuan (approximately $95 billion), a 9.55% increase from the previous year. However, net profit fell by 36.8% to 23.4 billion yuan (about $4.8 billion).
The first-half revenue marks the highest level since 2020. The report forecasts that the upward trend will continue into the second half of the year, with annual revenue expected to exceed 900 billion yuan.
The increase in R&D expenses is cited as the primary reason for the decline in net profit. Huawei's R&D spending for the first half of the year reached 121.3 billion yuan (approximately $24 billion), a 25.2% increase compared to the previous year. This figure represents the highest R&D expenditure for the first half of any year. The proportion of R&D expenses relative to revenue rose from 22.7% in the first half of last year to 25.94% this year. Huawei is significantly expanding its R&D efforts in areas such as semiconductors, server processors, Harmony operating system, AI computing, autonomous driving, 6G, and optical communications.
Additionally, rising semiconductor costs have contributed to a decrease in operating profit margins, which fell from 10.4% in the first half of last year to 7.0% this year.
In terms of business performance, Huawei maintained its leading position in the smartphone sector with a 20.6% market share in China during the first half of the year. The company shipped approximately 27.6 million units, a 20% increase from the previous year. In the electric vehicle software sector, Huawei's Hongmeng Zhixing sold 240,000 units in the first half, marking an 18.6% increase year-on-year. In the telecommunications equipment sector, Huawei showed the highest growth rate among the top five suppliers in the wireless access network (RAN) market, driven by global 5G base station expansions and domestic 5G network upgrades.
* This article has been translated by AI.
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