Huawei will have to focus its business on the high-end… for as long as it can.
What you need to know
- Huawei’s sale of the Honor brand has been finalized.
- Honor will be owned by a new entity, Shenzhen Zhixin New Information Technology Co., Ltd.
- The sale amount is undisclosed, although previous reports suggest 100 billion yuan ($15.2 billion).
Huawei has been in quite a pickle for the past year and a half, as the U.S. continuously attempts to block the Chinese company from working with any U.S.-based suppliers (with a few exceptions). No doubt Huawei’s troubles have affected its Honor brand as well, which sells lower-end smartphones and accounts for nearly 30% of Huawei’s total smartphone shipments. The latest development in Huawei’s messy situation is the confirmation of what we’re been hearing for about a month now; Huawei is selling the Honor brand.
The deal, as reported by Reuters, is a “market-driven investment made to save Honor’s industry chain.” No figure was given, but it has been reported that the deal is worth around 100 billion yuan ($15.2 billion), and will include much of Honor’s 7000 employees, R&D, supply chain management, and other assets related to the subsidiary. The brand will be owned by Shenzhen Zhixin New Information Technology Co., Ltd., a consortium comprised of over 30 companies. After the sale, Huawei will no longer hold any shares over the brand.
It’s a significant move for Huawei, which has been battling with the U.S. over trade sanctions for what seems like forever. The sanctions have led to a shortage in chips to power Huawei’s high-end smartphones, and despite having some truly impressive smartphones, lack of Google services has further hindered sales. According to Huawei’s statement, “this move has been made by Honor’s industry chain to ensure its own survival.”
Meanwhile, Huawei received a hollow victory recently when Qualcomm was given permission to resume supplying the company with chips. Unfortunately, these licenses are only good for 4G technology, which could hinder Huawei’s ability to produce 5G phones.
