23 October 2020
Huawei is reportedly busy in taking some serious decisions for its smartphone business. According to a report from Reuters that is citing people familiar with the matter, Huawei is in talks to sell parts of its Honor smartphone business. Honor is a smartphone brand currently owned by Huawei and it offers low to mid-range phones in China and select markets.
Selling parts of its Honor smartphone unit in a deal could fetch up to 25 billion yuan ($3.7 billion) to Huawei. Reportedly, there are many suitors in the line but Digital China Group Co Ltd is the frontrunner. Others on the list include TCL and Xiaomi. Citing the sources Reuters reports that Huawei wants to focus more on its higher-end Huawei phones rather than the Honor brand that it once established in order to deal with some cost-effective smartphone line as well.
It is currently unknown what parts of the Honor smartphone business will Huawei sell. According to people familiar with the matter, Huawei could sell Honor’s R&D capabilities and related supply chain management business to a suitable buyer. The deal may be an all-cash sale and could end up somewhere between 15 billion yuan and 25 billion yuan.
It is worth noting that if Honor becomes an independent brand, its purchase of components will no longer be subject to the US ban on Huawei. This is something the famous analyst Kuo Ming-Chi is throwing light on. Thus it is going to be a win-win situation for Huawei as it would need not plan and strategize for this brand anymore. Huawei will be able to better concentrate on its own brand, making more premium phones with better capabilities.
Despite getting the big ban from the US government, the Chinese company is doing quite well and standing upright for itself and its Chinese citizens, at least. The company is forced to look for other alternatives as the big US tech companies have cut ties with it. Still, according to a report from Canalys as well as Counterpoint Research in July 2020, Huawei managed to pass Samsung as the number one smartphone maker in the world in Q2 2020. Clearly, Huawei has got no reason to stop itself from any hurdle that comes into its way. The road does seem bumpy but Huawei is totally ready for it.
In the end, Reuters also concluded that if successful, Digital China will also partner with Huawei in cloud computing and other businesses.