Huawei’s half-year financial report released on October 6th reveals a nearly 40% decrease in net profit in the first half of the year. Huawei’s Executive Director, Yu Chengdong, once again emphasized the importance of “survival” in line with the earlier stance of Huawei’s founder Ren Zhengfei.
Yu Chengdong disclosed during an international media roundtable meeting on October 6th discussions about the rising storage costs faced by the mobile phone industry and hinted at possible future price adjustments for Huawei’s smartphone business.
He mentioned that the recent significant increase in storage component prices has added over $200 in costs per phone, leading to a noticeable impact on the company’s profitability. Despite attempting to internally absorb the pressure of rising component costs, this approach has significantly reduced the company’s overall profit margin.
At an industry level, the rising storage prices are becoming a common cost pressure faced by mobile phone manufacturers. Yu Chengdong noted that many companies have already started to raise product prices, and as smartphone prices continue to rise, the pressure on the low-end market will further intensify, prompting some manufacturers to shift towards the mid to high-end market.
“We will also have to raise prices in the future,” Yu Chengdong said, emphasizing that if losses continue, it will be challenging to sustain the business, stating “the company must survive first.”
The concept of “survival,” echoed Ren Zhengfei’s earlier statement made in an internal forum article titled “The company’s operational policy must shift from pursuing scale to pursuing profitability and cash flow” in August 2022. Ren Zhengfei emphasized on “survival as the primary guideline” and the complete closure of marginal businesses. He explicitly stated that from 2023 to 2025, Huawei must prioritize survival.
As we enter 2026, Huawei’s profit margin continues to decline, with Yu Chengdong reiterating the importance of “survival.”
Huawei’s financial report for the first half of the year, released on August 31st, shows the company achieved an operating income of 467.819 billion yuan (RMB) from January to June, a 9.55% increase year-on-year. The net profit attributable to the owners of the parent company was 23.428 billion yuan, a 36.77% decrease year-on-year.
In terms of cash flow, the net cash flow generated from operating activities in the first half of 2026 was negative (-39.885 billion yuan), compared to 31.183 billion yuan in the same period last year.
The inventory scale has also increased on the balance sheet. As of the end of June, the company’s inventory stood at 277.494 billion yuan, a 42.28% increase from the year-end 2025 figure of 195.043 billion yuan.
There has been a slight increase in cash flow from investment activities. In the first half of the year, the net cash flow generated from investment activities was 48.272 billion yuan, higher than the 21.706 billion yuan in the same period last year. The net cash flow from financing activities was -0.969 billion yuan, an improvement from -50.673 billion yuan in the previous year.
Overall, in the first half of 2026, Huawei’s operating costs and periodic expenses increased at a faster rate than revenue. Looking at cash flow, the net cash flow from operating activities shifted from positive to negative. On the balance sheet front, total assets of the company continued to grow, with liabilities slightly increasing compared to the beginning of the year.
Public reports show that due to tight supply and continuous rise in chip prices, Huawei and other mobile phone brands have adjusted the prices of some models. In September, Huawei made price adjustments on its official online store, covering entry-level, mid-range, and high-end flagship models.