Huawei’s H1 2026 Revenue Rose 9.6% as Profit Fell 36% on R&D and Cost Pressures

Huawei’s first-half 2026 results present a clear trade-off: revenue is recovering, but profitability is deteriorating as the company increases investment and absorbs higher costs. For January through June, revenue rose 9.6% year over year to 467.82 billion yuan, while net profit fell 36% to 23.81 billion yuan. 12

The figures suggest that Huawei is prioritizing technological independence and future growth over short-term earnings. That strategy is supporting demand in smartphones and AI chips, but it is also leaving margins and cash conversion under pressure. 6

Huawei’s key first-half figures

Metric	H1 2026 result	Year-over-year change
Revenue	467.82 billion yuan	+9.6%
Net profit	23.81 billion yuan	−36%
R&D spending	121.38 billion yuan	+25%
R&D as a share of revenue	About 26%	Record first-half level

Several reports describe the period’s net profit differently. China Daily and BigGo Finance cite net profit attributable to shareholders of about 23.43 billion yuan, down roughly 37%, while other reports cite 23.81 billion yuan. 1345 The difference may reflect different profit measures or reporting conventions, so the figures should not be compared without the full financial statement. The central conclusion is unchanged: revenue grew, while profit declined sharply.

Revenue growth did not translate into higher profit

Huawei’s revenue increase indicates that the company is continuing to generate demand despite the restrictions that have limited its access to some foreign components and software. The recovery was supported by smartphones and demand for AI chips, according to reporting on the results. 6

But the earnings trend moved in the opposite direction. A 9.6% increase in sales was outweighed by heavier spending and higher input costs, producing a much steeper decline in profit. Rising memory-chip prices also weighed on Huawei’s consumer business by increasing device costs. 1

That makes the result more significant than a simple slowdown in accounting profitability. Huawei is growing, but part of that growth is being achieved while the company carries a more expensive cost base and invests aggressively in future capabilities.

R&D reached a record first-half level

Huawei spent 121.38 billion yuan on research and development during the first half, a year-over-year increase of about 25%. R&D represented approximately 25.9% of revenue, according to company and financial-report summaries. 36910

The spending reflects Huawei’s effort to build capabilities across chips, AI and communications-related technology while expanding its smart-device ecosystem. The company’s strategy is not limited to defending its existing products; it is also aimed at developing alternatives to technologies that have become harder to source under U.S. restrictions. 26

Huawei’s 2025 annual report provides longer-term context. The company spent 192.3 billion yuan on R&D in 2025, equivalent to 21.8% of annual revenue. 8 The first-half 2026 figure therefore points to continued, and potentially accelerating, investment rather than a retreat from its long-cycle R&D model.

A deliberate bet on technological self-reliance

The results are consistent with a strategy that accepts near-term financial pressure in exchange for greater control over critical technology. Reporting on the results links Huawei’s R&D push to its pursuit of technological independence amid ongoing U.S. trade restrictions. 26

This approach can strengthen Huawei’s position if its investments create competitive chips, AI systems, devices and other products that generate durable demand. It can also help the company reduce reliance on external suppliers over time. However, the benefits are difficult to measure from a single half-year report, while the costs appear immediately in the income statement.

That tension explains why the results look positive and negative at the same time: revenue growth shows that Huawei is finding commercial opportunities, but the profit decline shows how expensive the transition remains.

What to watch in the second half

The full-year outlook cannot be estimated reliably from these results alone. Several factors will determine whether Huawei can convert its first-half revenue momentum into stronger earnings:

• R&D intensity: Continued investment may support future products but keep near-term expenses elevated. 68
• Component costs: Memory-chip prices and other input costs could continue to pressure device margins. 1
• AI and smartphone demand: These businesses helped support first-half revenue, but their contribution will depend on demand and Huawei’s ability to scale supply. 6
• Cash conversion: The combination of heavy investment, higher costs and working-capital needs makes cash performance an important complement to reported profit.
• Technology restrictions: Ongoing limits on access to foreign technology remain a strategic reason for Huawei’s investment push, but they also add operational complexity. 26

Huawei’s first-half report is therefore best read as evidence of a company still rebuilding its growth model under pressure. It is expanding revenue and investing at an unusually high rate, but it has not yet demonstrated that this expansion can produce stable, higher-quality earnings. The next meaningful test will be whether its AI, smartphone and broader smart-device businesses can grow fast enough to offset the cost of technological self-reliance.