Huawei Pumps $22 Billion Into R&D to Beat U.S. Sanctions

Huawei Moves Up Ranking in Fortune Global 500 List 2021

Few companies devote more of their revenue to research than Huawei Technologies Co., for which developing new technologies is a matter of thwarting crippling U.S. trade and investment sanctions.

China’s largest tech giant almost doubled its R&D budget over the past half-decade to $22.1 billion in 2021 — more than any company in the world outside America. That’s 22.4% of its sales that year: nearly double Inc.’s and Google-owner Alphabet Inc.’s proportions and more than triple iPhone-maker Apple Inc.’s. Only Meta Platforms Inc. came close among the so-called Faang contingent with 20.9%, data compiled by Bloomberg shows.

That growing warchest underscores Huawei’s do-or-die effort to develop chips, networking gear and even smartphones free of American technology, barred since 2019 after Washington accused Huawei of jeopardizing U.S. national security. The sweeping sanctions wiped out nearly a third of revenue in 2021, inflating the ratio the Chinese firm spent on research — though that’s still up in absolute terms from the previous year.

“The true value of Huawei lies in the R&D capabilities we have accumulated though our constant, long-term investment in research,” Meng Wanzhou, the eldest daughter of billionaire founder Ren Zhengfei, said in March during her first briefing since emerging from house arrest in Canada on charges of violating U.S. sanctions. “It’s in the company’s basic law that we will spend 10% of our annual revenue in R&D.””

Huawei, which isn’t publicly traded, was one of just six companies worldwide that spent more than $20 billion on R&D last year, Bloomberg data show. Its tally rivaled Microsoft Corp.’s and came in about $1 billion less than Apple and $2.5 billion shy of Meta. That approach has paid dividends so far — the Chinese networking giant received 2,770 U.S. patents last year, putting it at No. 5 behind perennial leader International Business Machines Corp., according to an independent study.

Amazon and Alphabet towered over all with total outlays of $56 billion and $31.6 billion, respectively. The median among the 15 companies in the SuperTech Index was $2.9 billion.