DeepSeek fuels return to profit for Chinese tech champion Huawei

Huawei Technologies posted a first-half profit, getting back into the black after the emergence of DeepSeek ignited a wave of AI development across China.

Net profit fell 32% to 37.1 billion yuan (R91 billion) from January to June, the Shenzhen-based company said in a filing. But that reversed a surprise fourth-quarter loss, when China’s national tech champion spent aggressively on chips and EV technology. Revenue rose 3.94% to 427 billion yuan, according to a statement posted to the Beijing Financial Assets Exchange.

Huawei, which designs AI accelerators that compete directly with Nvidia, has benefited from soaring demand since DeepSeek stunned the tech world with a large-language model to rival OpenAI’s GPT-4. Huawei’s Ascend has since become the national standard as Chinese developers such as Alibaba Group Holding raced to roll out new models, particularly as Beijing pushed local companies to shun Nvidia. Washington has banned exports of Nvidia’s most advanced chips to China.

The company also benefited from a smartphone resurgence. Huawei shipped 12.5 million devices in its home market last quarter, ranking No. 1 for the first time in more than four years, industry consultancy IDC said in a report. Competition from Huawei and Xiaomi Corp. has driven Apple  out of the top rankings in China, which saw a contraction in the overall market due to a sluggish domestic economy.

Huawei restructured its cloud unit to focus more resources on AI and computing, according to Chinese media reports last week.

The telecom giant has also waded into electric vehicles by offering smart driving software and components to carmakers. The Maextro S800, a sedan priced at as much as 1 million yuan in partnership with Anhui Jianghuai Automobile Group, got 10000 units of locked-in orders after a May launch, according to a Weibo post this month from Richard Yu, Huawei’s consumer business group head.

BLOOMBERG