SHENZHEN: China’s Huawei Technologies Co Ltd (HWT.UL) said net profit slumped last year, as the tech conglomerate boosted research and development spending and grappled with increases in materials costs.

But revenue climbed 0.9%, in line with a company prediction, suggesting that Huawei has reached some level of stability after successive rounds of U.S. export controls hammered its once mighty smartphone business.

It posted net profit of 35.6 billion yuan ($5.2 billion), down roughly two-thirds from 2021 when profit was helped by the sale of its Honor mid-range smartphone business. The decline was, however, still severe even when compared to 2020 - a drop of 44%.

“In 2022, a challenging external environment and non-market factors continued to take a toll on Huawei’s operations”, Eric Xu, Huawei’s rotating chairman, said in a statement.

“In 2023 and the coming years, sustainable survival and development will remain a strategic focus for Huawei. Plum blossoms tend to grow sweeter from a harsh winter’s freeze. Today, Huawei is like a plum blossom,” he said.

Huawei, a major supplier of equipment used in 5G telecommunications networks, has been the target of U.S. export controls since 2019, restricting its supply of chips and chip-design tools from U.S. companies.

Washington has said Huawei represents a national security risk - a charge that the company denies. Tensions with the U.S. also saw Meng Wanzhou, CFO and daughter of the company’s founder, detained for three years in Canada over alleged efforts to cover up attempts by Huawei-linked companies to sell equipment to Iran in breach of U.S. sanctions. Charges against Meng were later dismissed.

Revenue for 2022 came in at 642.3 billion yuan. While that represented mild growth over 2021, it was still far below the record 891.3 billion yuan logged in 2019 when it was the top Android smartphone vendor globally.

By segment, revenue from the company’s enterprise division, which includes business to-business industrial projects, soared 30%. Revenue for its telecommunications business inched up 0.9% while sales for its consumer electronic business tumbled 11.9%.

R&D spending rose 13.2% to 161.5 billion yuan, equivalent to a quarter of the company’s revenue, said Meng.

Huawei’s asset-to-liability ratio was 58.9% and it had a net cash balance of 176.3 billion yuan.

“Our financial position remains solid, with strong resilience and flexibility,” said Meng, who will become the company’s chairwoman on April 1. Huawei rotates its chairperson every six months.