Huawei's profit fell sharply in the first half of 2026 as higher operating costs and increased spending on research and development put pressure on the Chinese technology giant's finances.

The company reported a 36% decline in net profit for the six months through June, according to financial figures released on Monday.

Huawei's net profit stood at about 42.9 billion yuan ($6 billion) during the period, down from roughly 67 billion yuan a year earlier.

The decline comes as Huawei continues to invest heavily in artificial intelligence, computing infrastructure and other technologies while dealing with intense competition in China's technology market.

Despite the weaker profit, the company recorded revenue of about 432 billion yuan, representing an increase of approximately 2% from the same period last year.

The figures show that Huawei's business continues to generate substantial sales even as the cost of maintaining that growth increases.

A major factor behind the decline has been Huawei's investment in research and development.

The company has been increasing spending on advanced technologies as it attempts to strengthen its position in areas including artificial intelligence, semiconductors and cloud computing.

Huawei has also been developing its own AI processors as Chinese technology companies face restrictions on access to some advanced American semiconductor products.

The company's push into AI has increased the importance of its computing and chip businesses, particularly as demand for AI infrastructure continues to grow.

Huawei's consumer business has also remained an important part of the company, with smartphones, tablets and other devices continuing to compete in China's increasingly crowded market.

However, the company faces pressure from rivals as China's technology sector becomes more competitive.

The profit decline also highlights the financial cost of Huawei's effort to build a broader technology ecosystem.

Following years of US restrictions, Huawei has invested heavily in developing alternatives to foreign technologies and strengthening domestic supply chains.

Those efforts have helped the company maintain its presence in the Chinese market, but they have also required substantial investment.

Huawei's research and development expenditure has remained among the highest in China's technology industry.

The company has increasingly focused on areas considered strategically important to China's technology ambitions, including advanced computing, artificial intelligence and semiconductor development.

The latest results therefore present a mixed picture.

Huawei's revenue continues to grow, but profit is being squeezed as the company spends more to develop new technologies and compete across several major markets.

The company is also operating in a difficult international environment, with restrictions on technology exports and growing competition between China and the United States affecting the semiconductor industry.

For Huawei, the challenge now is to turn its heavy investment in technology into stronger financial returns while maintaining the growth of its core businesses.

The first-half results suggest that the company's transformation into a broader technology and AI supplier is continuing, but the process is coming with significant costs.