Huawei to soon announce plan to sell-off its Honor brand amid US pressure
Published: Nov 16, 2020 07:25 PM

Huawei Honor 9X unveiling ceremony in July, 2019 photo: Xinhua

Chinese tech giant Huawei Technologies will soon announce it will sell-off its sub brand Honor, considered a critical move in easing the impacts of the US' chipset ban and ensuring its sales as well as supply chain remain afloat, some analysts said. 

Some analysts have also called this decision, which has triggered market rumors for a while now, as a decision that involves "cutting off its arm to save its body" by the Shenzhen-based company, which is also the second-largest smartphone vendor globally. It will help it focus more on its mainstream business areas and ensure the supply of cutting-edge chipsets for the Huawei brand. 

The sell-off plan is scheduled to be announced on Tuesday morning, led by more than 30 supply chain partners, domestic news site reported on Monday, citing sources close to the matter.  

A source from Honor who preferred not to be identified told the Global Times on Monday that it's likely the announcement will be made soon, without providing any further details. Huawei has not responded to a press request sent by the Global Times on the matter as of press time on Monday. 

Huawei plans to sell Honor in a 100 billion yuan ($15.2 billion) deal to a consortium led by handset distributor Digital China and the government of its home town, Shenzhen, Reuters reported on November 10, citing people with inside knowledge of the matter.

The "all-cash" sale will include almost all assets including the brand, research and development (R&D) capabilities and supply chain management, according to the report. 

However, Digital China said in a recent statement that no agreement had been reached between the firm and Huawei in regards to the selling of Honor.

"Facing a severe chip cut that will threaten its key phone business, it's a hard decision, but also understandable, as Huawei has to save its 'valuable chips' for its high-end flagship businesses, and sell the 'budget' Honor brand to keep other business areas running," an industry insider and close follower of Huawei told the Global Times.

The person said it's still unclear whether "leaving" Huawei will actually allow Honor to avoid US sanctions and receive chips, but he believes that, at least, it could be a "possible way out" for the telecommunications giant's handset businesses.

As part of the blockade set up by the US targeting Huawei, delivering a heavy blow to the Chinese high-tech industry overall, the US has been escalating its measures in curbing supplies to the Chinese tech giant. Most recently, September 15 was the date set by the US to limit high-end chipset supplies to Huawei, and it is expected to have a large impact on the company's Kirin chips and high-end flagship smartphones.

The key lies in whether the US commerce department can recognize Honor's independence and the takeover, Ma Jihua, a veteran industry analyst and close follower of Huawei, told the Global Times on Monday, noting that "once the shareholding shift has been completed, Honor can, in principle, immediately buy chips from chip buyers such as MediaTek." 

Ma also noted that Honor has been relatively independent from Huawei since the beginning, and is indeed created and built up by all its distributors along the whole industrial chain. "Selling the brand to distributors may be the best choice and also within expectations," Ma said.