Huawei sells Honor smartphone brand as US sanctions bite
Huawei is selling its budget smartphone brand Honor to a newly-formed consortium of Chinese buyers after US sanctions pushed the division to the brink of collapse.
The Chinese tech giant said it will offload Honor’s business assets to Shenzhen Zhixin New Information Technology Co, a group of over 30 agents and dealers, including several state-owned companies.
No value was given for the transaction, and Huawei said it will not hold any shares or be involved in any business activity at the new Honor company.
The sale comes after the US targeted Huawei’s supply chain with sanctions over concerns about national security. Huawei has always denied any wrongdoing.
In a statement today the company said its consumer division had been under “tremendous pressure” due to a “persistent unavailability of technical elements needed for our mobile phone business”.
“This move has been made by Honor’s industry chain to ensure its own survival,” it added.
The Honor brand, founded in 2013, is targeted at the youth market, offering phones in the low to mid price range. It now ships more than 70m handsets each year.
But the sanctions mean Huawei, which is the world’s second largest smartphone maker, has been forced to refocus efforts on its high-end handsets and corporate division.
However, it is also facing pressure on its high-end models, with the company saying it would be unable to keep making its Kirin chipset.
Huawei’s revenue growth slowed in the third quarter as a result of the crackdown, as well as the impact of the Covid-19 pandemic.
Ben Wood, chief of research at CCS Insight, said Huawei had “few other options” apart from divesting or closing Honor.
“However, at this stage there is a distinct lack of detail on the next steps, making it hard to understand what direction the new business will take and how it will recover,” he said.
“We assume that the goal will be for the new independent company to re-establish ties with Google and component suppliers.”