Huawei is revising its priorities due to US sanctions and intends to focus on more expensive smartphone models instead of developing the HONOR brand. According to Reuters, which cites sources close to the Chinese company, Huawei wants to sell part of the business. Assets to be sold include the HONOR brand, research and development, and a supply chain management business. According to one source, the deal could be between 15 and 25 billion yuan ($ 2.2-3.7 billion).
The most likely buyer is the Digital China Group, the main distributor of HONOR smartphones. Other potential buyers include major electronics manufacturer TCL and Xiaomi. It is reported that Huawei has already conducted negotiations, which were confidential. None of the participants responded to the publication’s request for a possible deal.
The first that Huawei could sell HONOR was reported by analyst Ming-Chi Kuo. He called it a life-saving decision for the brand, which will allow it not to depend on Huawei, which means it will free it from US sanctions. In essence, the sale of HONOR will free the hands of the smartphone manufacturer and component suppliers themselves. Nevertheless, Huawei representatives were quick to refute the analyst’s words, saying that the company is not going to sell the smartphone business.
The HONOR brand was founded in 2013 and currently operates independently of its parent company, selling smartphones online through its own website and through retailers. It competes with Xiaomi, OPPO and Vivo in the low-cost mobile market. According to analyst firm Canalys, 14.6 million HONOR smartphones were sold in the second quarter of 2020, which is 26% of Huawei devices. Although the brand’s net profit was small, at less than 5 billion yuan ($ 740 million).
If Digital China, which is also partnering with Huawei in cloud computing and other areas, does buy, the company will close the deal mainly with bank loans and provide funding in the coming weeks, sources said. Digital China’s market value is currently about $ 2.9 billion.