Tencent vs Huawei: Which Tech Giant is Earning More Profits in 2024?
Huawei and Tencent have seen significant growth in their revenues and profits in the first three quarters of 2024. These two Chinese tech giants have made their mark globally, but there is an interesting difference between the two companies in terms of earnings and profits. Let’s know which of these two companies is making more profits and what could be the reasons behind it.
Huawei’s Financial Position
Huawei achieved operating revenue of 585.9 billion yuan (about $80.1 billion) in the first three quarters of this year. The company’s net profit stood at 62.868 billion yuan (about $8.6 billion) in this period. Huawei’s revenue was strong, but its profit growth was relatively modest.
Tencent’s Financial Position
On the other hand, Tencent’s operating revenue was slightly lower than Huawei’s. Tencent earned operating revenue of 453.819 billion yuan (about $62.1 billion) in the same period, 132.1 billion yuan less than Huawei. However, Tencent’s net profit was higher than Huawei’s, coming in at 88.191 billion yuan (about $12.1 billion).
Tencent’s net profit is about 25.3 billion yuan higher than Huawei, putting it ahead in terms of profitability.
Why the Profit Gap?
Tencent’s profit is higher than Huawei’s, mainly due to its wider business reach and lower R&D (research and development) investment. While Huawei spends heavily on R&D in its network equipment and smartphone business, Tencent mainly generates revenue from digital services, gaming, and advertising, which are comparatively less expensive.
Tencent’s core business focuses on social media, online gaming, and digital advertising, which can generate higher profits at lower costs. In contrast, Huawei’s focus is on network and telecommunications equipment, which requires more technical research and development.
Tencent Third Quarter Performance
Tencent recently achieved revenue of 167.19 billion yuan (approximately $23.07 billion) in its third quarter, an increase of 8% over the previous year. Tencent’s net profit for the quarter was 5.323 billion yuan (approximately $734.57 million), an increase of 47% over the previous year.
In addition, Tencent’s net profit according to non-IFRS metrics was 5.981 billion yuan (approximately $825.38 million), an increase of 33%.
Final Verdict
Overall, Huawei had higher revenue than Tencent in the first three quarters of this year, but Tencent is ahead in terms of profitability. Tencent’s business structure and lower R&D costs have led to the company earning more profit than Huawei. This difference shows that Tencent has an advantage in low-cost sectors such as digital and advertising, while Huawei focuses on more technical areas, which requires it to invest heavily.
The performance of Huawei and Tencent reflects the diversity of China’s technology companies, with Huawei focused on networks and smartphones while Tencent is based on digital platforms and services. It will be interesting to see in the coming times how these two companies balance their revenues and profits and strengthen their position in the global market.
