Huawei reported a 36 percent decline in net profit for the first half of 2026, citing increased expenditures on artificial intelligence research and development as a key factor behind the drop. The Chinese technology company disclosed on Monday that its net profit for January through June stood at 23.8 billion yuan ($3.54 billion), down from 37.2 billion yuan in the same period of 2025.

Despite the profit decline, Huawei’s revenue grew by 9.5 percent year-on-year, reaching 467.8 billion yuan during the first six months of the year. The company allocated roughly 25 percent of this revenue—amounting to 121 billion yuan—toward research and development, particularly focusing on building computing products designed for AI applications. This R&D spending showed a significant increase compared to the 97 billion yuan invested over the same timeframe in 2025.

A company spokesperson emphasized Huawei’s continued strategic focus and commitment to sharpening its competitive advantage throughout 2026. At the same time, the spokesperson acknowledged ongoing challenges, including external uncertainties and rising raw material costs, which have contributed to financial pressures.

Huawei’s results reflect the broader trend among technology firms that are ramping up investments in AI amid a competitive and rapidly evolving market landscape, even as these costs weigh on short-term profit margins.