Huawei Technologies Co Ltd is in talks with Digital China Group Co Ltd and other suitors to sell parts of its Honor smartphone unit in a deal that could fetch up to 25 billion yuan ($3.7 billion), people with knowledge of the matter said.
Embattled Huawei is resetting its priorities due to U.S. sanctions and will focus on its higher-end Huawei phones rather than the Honor brand which is aimed at young people and the budget conscious, they said.
The assets to be sold have yet to be finalised but could include Honor’s brand, research & development capabilities and related supply chain management business, two of the people said.
However, the newswire’s sources caution that this hasn’t been finalized yet.
Who would do Huawei the honor, then?
Reuters reports that Honor phone distributor Digital China is considered a front-runner for the deal. However, the newswire adds that TCL and Xiaomi are also in the running.
Selling part of Honor to another business theoretically means that US sanctions wouldn’t apply to Honor-branded devices produced as part of this arrangement. It isn’t immediately clear what this would mean for Honor devices released prior to a sale though.
Furthermore, there’s no guarantee that the US government wouldn’t simply play whack-a-mole and apply sanctions to any company that acquires part of Honor. Huawei and Honor are intertwined in several ways, particularly when it comes to components used and research and development. So extricating large chunks of the sub-brand from its parent company will likely be a major challenge in this regard.
We’ve contacted Xiaomi regarding the reported talks but the company declined to comment. We’ve also contacted Huawei for comment and will update the article if/when it gets back to us. Do you think selling Honor is a good idea for Huawei? Take our poll further up the page!
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