Chinese vendor Huawei felt the full impact of US trade restrictions during Q1, with the company’s device unit weighing heavily on its top-line and offsetting steady growth in its core network business.

In its earnings statement, rotating chairman Eric Xu noted 2021 would be a challenging year, but one in which Huawei’s future strategy will begin to take shape.

“We remain committed to technological innovation and investing heavily in R&D as we work to address supply continuity challenges caused by restrictions in the market,” Xu said.

A Huawei representative told Mobile World Live its network business growth remained steady despite uncertainties caused by restrictions.

Huawei has moved to diversify its product line-up and reduce reliance on chip imports as trade sanctions increasingly impact its business outside of China.

Last week it showcased its next-generation intelligent components for electric vehicles, which have been in development for about two years, at BAIC Group’s booth at the Shanghai Auto Show.

Revenue dropped 16.5 per cent year-on-year to CNY152.2 billion ($23.5 billion) in Q1, while its profit margin increased 3.8 percentage points to 11.1 per cent on improvements in operations and management efficiency, along with increased patent royalty income.

The company didn’t reveal net profit or break out revenue by business group, but noted its Consumer Business Group’s revenue was hit by offloading its Honor brand in November 2020.

Net profit grew 3.2 per cent year-on-year to CNY64.6 billion in 2020, with revenue up 3.8 per cent.