24 November 2020
After weeks of rumors and speculations, Huawei has made it official that it is selling all of the Honor business. A deal has been agreed with Shenzhen Zhixin New Information Technology Co. Ltd, a new company set up by a consortium of around 40 companies including government-backed firms.
The company will have full ownership over everything related to Honor like supply chain, R&D capabilities, and a workforce of about 7,000 employees. Huawei says once the deal is complete, it will neither own any share nor will be involved with Honor's business and decision making in any way. However, Honor's direction and management team will remain unaffected by the deal.
A statement released by Huawei mentions that the decision to sell the business was first proposed by over 30 agents and dealers of the Honor brand. It was done to ensure the Honor brand's survival and to be able to continue serving its customer base as it has been doing since its inception in 2013. It is expected that the deal will open doors for US-based companies to do business with Honor as it now has a new parent company.
Huawei has been under the pump ever since the U.S. government put it on the entity list. The decision prohibits U.S.-based companies from working with the Chinese smartphone giant. This is the reason it has been releasing Android phones without Google apps and services. Since it owned Honor, a brand that releases budget/mid-range phones aimed at youth, it was also facing similar issues but with the new deal in place, it should be able to operate like any other brand.