Huawei’s turnaround is gathering pace, but it’s coming at a price. The company booked its highest half-year revenue since 2020 while profits slid sharply, underscoring the cost of racing toward self-reliance under U.S. export controls.
From January to June 2025, Huawei generated 427 billion yuan (about $59.84 billion) in revenue, a clear sign that demand across its businesses is rebounding. Yet net profit fell 32% to 37 billion yuan (roughly $5.17 billion), reflecting a deliberate surge in spending on research and development to lessen dependence on external suppliers.
R&D outlays climbed to 96.9 billion yuan ($13.58 billion) in the first half, up from 88.9 billion yuan ($12.46 billion) a year earlier. That investment ramp began paying visible dividends when the company re-entered the flagship phone spotlight with the Mate 60 series. The devices feature the in-house Kirin 9000S, reportedly built by SMIC on a 7nm process, a milestone that sparked intense debate across the tech industry and drew scrutiny from U.S. officials who argued the move skirted sanctions.
The technical ceiling remains a challenge. Without access to cutting-edge EUV lithography tools, Huawei and its domestic manufacturing partners are constrained to nodes such as 7nm for now. China’s top foundry, SMIC, is widely seen as capped at that level under current conditions. In parallel, Huawei’s partner SiCarrier is working on custom EUV equipment aimed at reducing reliance on overseas toolmakers. If successful, such efforts could open a path for Huawei and other Chinese firms to accelerate advanced chip production and narrow the technology gap.
The immediate takeaway is twofold: Huawei’s revenue engine is recovering, but profitability is being intentionally sacrificed to fund independence in critical technologies. For the broader industry, Huawei’s push signals faster development cycles for domestic chipmaking and tools, with potential ripple effects across smartphones, networking gear, and cloud infrastructure. Keep an eye on R&D intensity, SMIC’s process roadmap, and the next wave of Kirin-powered devices to gauge how quickly Huawei can convert today’s heavy investment into tomorrow’s margin rebound.
