The battle between the giants in the technology world never ends. Finally, a speech at the 2024 Tsinghua Wudaokou Global Finance and Human Resources Forum in China revealed the major differences between Apple and Huawei’s financial strategies. Let’s take a closer look at how much each company spends and how much it earns…
Apple and Huawei face off: Apple’s R&D spending is low, but profits are 7.8 times higher
Cai Jianhui, a lecturer at the Xiamen National Academy of Accounting, emphasized that Apple’s R&D (Research and Development) expenditures over the past decade have been considerably lower than Huawei’s, yet its profits have been 7.8 times higher. So how is it that Apple spends less on R&D and makes much more profit?
Apple’s asset-light model may be the biggest answer to this question. Apple does not have huge production facilities or build factories . It carries out production entirely with external sources, which allows it to keep its costs very low. Apple also successfully implements a zero-stock policy.
In this way, it manages its production and sales processes extremely efficiently without having almost any products in its warehouses . Instead of keeping products in stock, it avoids unnecessary costs by producing according to demand. On the other hand, Huawei focuses more on technology with its large R&D investments.
Huawei’s R&D spending in 2023 was around 40% of its revenue, a huge difference compared to Apple’s 5.53% R&D spending rate, but Huawei’s investments are making its products more innovative and higher value-added.
Huawei is trying to make a difference with the technological superiority of its products, but this also brings with it high costs. After all, while Apple makes high profits with a low-cost structure, Huawei is trying to compete in the market by investing in more technology development.
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