Investor Alert

Oct. 23, 2020, 12:07 a.m. EDT

Huawei revenue growth slows amid U.S. restrictions

By Dan Strumpf

HONG KONG--Huawei Technologies Co. posted a lower rate of revenue growth in the third quarter, as the Chinese telecom giant continues to grapple with U.S. restrictions on its ability to buy chips and other technology.

The Shenzhen-based company said revenue in the first nine months of the year rose 9.9% to 671.3 billion yuan ($100.42 billion) compared with the same period for 2019.

Although Huawei didn't break out results for the third quarter alone, a Wall Street Journal calculation showed revenue for the period rose 3.7%, marking a slowdown in growth from the prior quarter, when revenue grew 22%.

"Throughout the first three quarters of 2020, Huawei's business results basically met expectations," the company said in a statement.

Huawei also said its net profit margin for the first nine months was 8%.

Although Huawei is privately held, it issues a limited set of unaudited figures about its business each quarter. It didn't disclose its net income for the period, nor did it break out the performance of different business lines or geographical regions--figures it generally only discloses on a once-a-year basis.

The slowdown in revenue growth indicates that an increasingly tough set of U.S. restrictions on Huawei's ability to source parts is starting to bite. The Trump administration last year added Huawei to an export blacklist blocking its ability to procure U.S.-sourced chips. Huawei has repeatedly denied assertions by U.S. officials that it poses a security threat.

Nonetheless, a growing number of European countries, including the U.K. and Sweden, have joined the U.S. in blocking Huawei from their 5G network rollouts in recent months.

This year, Washington tightened export restrictions on Huawei, preventing it from buying any chips made using American technology, including chips the company designed itself.

The tighter rules took full effect on Sept. 15. Analysts believe Huawei is now forced to run on its inventory of chips that it stockpiled in advance of the rules. Executives have said that it will no longer be able to buy its Kirin chipset, used to power the company's most advanced smartphones and manufactured by Taiwan Semiconductor Manufacturing Corp., after that date.

On Thursday, Huawei unveiled its latest flagship smartphone, the Mate 40, in an online event that showcased the new device's camera and artificial-intelligence technology. However, analysts have said the company will struggle to release new devices unless the U.S. Commerce Department grants licenses to Huawei's suppliers.

Write to Dan Strumpf at dan.strumpf@wsj.com

Link to MarketWatch's Slice.