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Huawei, Under Financial Pressure, Selling Parts of Its Smartphone Business
Reuters reports that Huawei is in talks to sell off parts of the Honor business in a deal potentially worth up to 25 billion yuan (~$3.7 billion). The report, citing “people with knowledge of the matter,” alleges that Honor’s brand, research and development infrastructure, and associated supply chain management business could be sold under the deal, but it hasn’t been finalized yet. Huawei will focus on higher-end phones due to the US sanctions, while Honor has focused on young and/or budget-conscious consumers. 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.
By selling part of Honor to another business, 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. But 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.
Reuters reports that Huawei is in talks to sell off parts of the Honor business in a deal potentially worth up to 25 billion yuan (~$3.7 billion). The report, citing “people with knowledge of the matter,” alleges that Honor’s brand, research and development infrastructure, and associated supply chain management business could be sold under the deal, but it hasn’t been finalized yet. Huawei will focus on higher-end phones due to the US sanctions, while Honor has focused on young and/or budget-conscious consumers. 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.
By selling part of Honor to another business, 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. But 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.
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