Huawei’s Cloud Revenue Slips Amid Intensifying AI Chip Race
In a sign of the complex challenges facing China’s tech champions, Huawei reported a decline in cloud revenue from external customers in 2025, even as its home market accelerates its push for technological self-sufficiency. The company, a global telecommunications and consumer electronics powerhouse, saw its externally-facing cloud computing revenue fall by 3.5% to 32.16 billion yuan ($4.6 billion) last year. This performance contrasts sharply with the broader industry boom and the aggressive growth of some domestic rivals.
The data, part of Huawei’s annual report, highlights a critical tension: while Beijing has urgently urged tech independence—particularly in the strategically vital artificial intelligence semiconductor space—Huawei’s own efforts to replace U.S. technology with its in-house Ascend AI chips have yet to translate into the double-digit cloud revenue gains seen from competitors like Nvidia.
ICT Segment Growth Moderates
The company’s core ICT (Information and Communications Technology) infrastructure segment, which includes its Ascend AI chip solutions designed to rival Nvidia’s products, reported revenue growth that slowed to 2.6% in 2025, down from 4.9% in 2024. Total ICT revenue for the year was 375.01 billion yuan. This moderation occurs against a backdrop of U.S. export restrictions that have severely limited Chinese firms’ access to the most advanced Nvidia chips, creating both a hurdle and a mandate for domestic alternatives.
When internal cloud usage is included, Huawei’s total cloud revenue rose 4.8% to 72.8 billion yuan. However, the decline in external sales—a key indicator of its competitiveness in the open market—is a notable soft spot. As the second-largest cloud provider in mainland China, Huawei’s trajectory is closely watched as a bellwether for China’s tech sovereignty goals.
Competition Heats Up in China’s AI Cloud Market
Huawei’s external cloud revenue dip comes as rivals, particularly ByteDance, have rapidly expanded their AI-driven cloud businesses in China. The TikTok owner has been aggressively securing high-end Nvidia chips, reportedly through a partnership involving a planned data center in Malaysia. Furthermore, Reuters reported that both ByteDance and Alibaba, China’s largest cloud provider, are considering placing orders for Huawei’s next-generation AI chip, suggesting a complex ecosystem of competition and potential collaboration.
Alibaba reported a robust 36% increase in its cloud segment revenue to 43.28 billion yuan for its fiscal year ending March 2025. Tencent also cited cloud services as a major driver of a 22% year-on-year increase in its business services revenue. This competitive pressure underscores the high stakes in China’s cloud market, where global leaders like Amazon Web Services and Microsoft Azure have a limited presence.
Global Cloud Boom Outpaces China’s Slowdown
Huawei’s modest cloud growth figures stand in stark contrast to a surging global market. According to analyst firm Omdia, worldwide spending on cloud infrastructure services grew 29% in the fourth quarter of 2025, marking the sixth consecutive quarter of expansion above 20%. Omdia predicts 27% growth for the entire year in 2026. This global upswing, fueled by enterprise AI adoption, makes Huawei’s external revenue decline in China’s slowing economy particularly pronounced.
The broader economic context is one of tepid consumer spending in China since the pandemic. A recent local promotion for an AI agent named OpenClaw, which encouraged downloads and payments for cloud-based AI models, exemplifies the industry’s efforts to stimulate demand. Yet, translating AI hype into sustained cloud revenue remains a formidable challenge.
Consumer Business Holds Steady Amid Smartphone Shifts
On the consumer front, Huawei’s smartphone business showed resilience. According to Counterpoint, Huawei ranked first in China by shipments for 2025, posting a 1.7% increase. However, the company lost market share to Apple toward the end of the year following the iPhone 17’s release. This dynamic illustrates the fierce competition in the premium device segment, where Huawei continues to rebuild its ecosystem after previous U.S. sanctions.
For 2025 overall, Huawei reported total revenue of 880.9 billion yuan, up 2%, with net profit rising approximately 8% to 68 billion yuan. The company’s intelligent automotive solutions unit, which provides software and driver-assist technology to partner automakers, saw revenue grow 72% to 45.02 billion yuan—a dramatic slowdown from the 474.4% hyper-growth of 2024, as the initial surge in electric vehicle partnerships matured.
Record R&D Investment Underpins Long-Term Strategy
Huawei’s commitment to overcoming technological barriers is evident in its spending. The company invested a record 192.3 billion yuan in research and development in 2025, representing 21.8% of total revenue. This massive outlay funds everything from semiconductor design to cloud AI platforms and operating system development.
“In 2025, Huawei’s overall performance remained steady,” said Sabrina Meng, Huawei’s rotating chairwoman, in a statement. The company’s path forward is clearly charted: leveraging unprecedented R&D to close the gap with U.S. leaders in AI and advanced chips, while navigating a complex domestic and global landscape. The current cloud revenue figures are a snapshot of a long-term battle where short-term market share may be sacrificed for the goal of systemic technological independence.
Note: All financial figures are in Chinese yuan (CNY) unless otherwise specified. Currency conversions are approximate based on the average 2025 exchange rate. Market share data for 2025 is from Counterpoint Research. Cloud infrastructure growth figures are from Omdia.
