Huawei to sell off Honor amid 'difficult time'
Huawei Technologies has decided to sell all of its Honor business assets to Shenzhen Zhixin New Information Technology Co, a decision made in light of “this difficult time,” Huawei said in a statement on Tuesday.
Founded in 2013, Honor has focused on the youth market by offering phones in the low to mid-end price range, with annual sales exceeding 70 million units.
A monetary figure for the deal was not mentioned, but industry insiders and media estimate the value to hit US$40 billion, a record high in the smartphone industry.
Shenzhen Zhixin, invested and owned by over 30 dealers and partners of Honor, called it a “market driven” move to ensure Honor's industry chain survival, the company said in a public statement.
“Huawei's consumer business has been under tremendous pressure as of late. This has been due to a persistent unavailability of technical elements needed for our mobile phone business,” Huawei said.
Huawei has been facing strict US tech export controls which make it difficult for Huawei and Honor to obtain key components and technologies.
Huawei is facing “its most serious challenge since taking the lead in 2016,” as Huawei was forced to restrict its smartphone shipments following US sanctions, said Canalys Analyst Jia Mo.
Huawei’s smartphone sales dropped 18 percent year on year in China in the third quarter, according to researcher Canalys.
Honor's independence from Huawei is expected to help sustain the brand’s upstream and downstream suppliers, said an industry source who declined to be identified.
Once the sale is complete, Huawei will not hold any shares or be involved in business management or decision-making activities in the new Honor company.