Huawei Investment & Holding posted first-half 2026 results on August 31. Revenue rose 9.6 percent to 467.82 billion yuan. Research and development spending rose 25.2 percent to 121.38 billion yuan. That is 25.9 percent of sales (Reuters, 2026).
Net profit fell 37 percent to 23.43 billion yuan, about $3.48 billion. Operating costs rose 12.4 percent, faster than sales. Memory and other parts cost more. Cash from operations swung negative (Reuters, 2026).
Research spending was more than five times the profit for the same six months.
Twenty to Twenty-Five Percent Is the Band I Keep Seeing
The companies I write about in models, chips, networks, and software keep raising the same budget question. How much of this year's sales do you put back into the next product before a rival ships it.
My recent work puts the answer in a tight range. Twenty to twenty-five percent of revenue. Below that, you buy someone else's stack later. Above that, you are funding a second company inside the first one, and the board will ask why profit moved.
Huawei sat at 21.8 percent of full-year 2025 revenue, or 192.3 billion yuan (Huawei, 2026). The first half of 2026 moved the ratio to 25.9 percent. That is the top of the band I use with buyers.
Twenty to twenty-five percent is the research load this market now charges. Huawei paid it in public.
The Money Goes Into Chips, Cars, Phones, and Models
Huawei says the extra spend sits in connectivity, computing, cloud, devices, intelligent driving, and artificial intelligence. I read Jiahui Huang's Wall Street Journal write-up in this morning's paper. Huang names the jobs the extra money is meant to fund: cars that drive themselves, phones and other devices, and chips meant to replace Nvidia accelerators that U.S. rules keep out of Huawei's supply chain.
Yicai reported 381 chip models designed and produced over six years, with a Kirin 2026 part due this fall (Yicai, 2026).
U.S. limits since 2019 cut Huawei out of many carrier and cloud deals. The company kept raising research after those limits. That choice shows up as a smaller profit this half.
What You Do With the Number If You Are Not Huawei
You do not copy Huawei's ratio unless you also build radios, phones, cars, and training chips. You do copy the discipline. Name the share of revenue that funds the next model, the next silicon, or the next agent stack. Put that share next to the last three years. If the line is flat while the vendors you buy from are climbing through 20 percent, your roadmap is someone else's.
Ask a supplier for the same ratio they just printed. A chip, model, or network vendor that will not say what share of sales goes back into the product is asking you to fund their catch-up later, inside your contract.
Huawei told the Journal the full-year outlook is still under review. Watch whether the second half stays near 26 percent of sales or falls back toward the 2025 full-year mark.
Open last year's research and product-engineering spend as a percent of revenue. If it sits under 20 percent, write down which vendor will own the next release you cannot build. Then ask that vendor what share of their sales funded the thing they want you to renew.
Huang, Jiahui. "Huawei Profit Slumps by a Third on R&D Expenses, Raw-Material Costs." The Wall Street Journal, 31 Aug. 2026, www.wsj.com/business/earnings/huawei-profit-slumps-by-a-third-on-r-d-expenses-raw-material-costs-3533ebad.
Reuters. "Huawei H1 Profit Drop Quickens to 36% on Rising Costs, R&D Spending." Reuters, 31 Aug. 2026, www.reuters.com/world/asia-pacific/huawei-h1-profit-drop-quickens-36-rising-costs-rd-spending-2026-08-31/.
Yicai. "Huawei's First-Half Profit Falls 36% Amid Record R&D Spending." Yicai Global, 1 Sept. 2026, www.yicaiglobal.com/news/huaweis-first-half-profit-falls-36-amid-record-rd-spending.
Huawei. "Company Facts." Huawei, Apr. 2026, www.huawei.com/en/media-center/company-facts.
TechNode. "Huawei's H1 Revenue Rises 9.6% as R&D Spending Hits RMB121.4 Billion." TechNode, 1 Sept. 2026, technode.com/2026/09/01/huawei-h1-revenue-rd-spending/.
