The deal will create a new parent company for Honor, with Huawei holding zero ownership.
Last week, a report claimed Huawei had finalized a buyer for Honor’s smartphone business. Today, Reuters is reporting that Huawei has agreed to sell Honor, a smartphone brand under the Huawei Consumer Business Group, to a consortium of over 30 agents and dealers. The buyers announced they’re setting up a new company called Shenzen Zhixin New Information Technology to complete the purchase.
Once the sale is complete, Huawei will no longer hold any share in the new Honor brand. The deal will include everything from R&D capabilities, supply chain management, and other Honor assets. Honor’s workforce includes over 7,000 employees.
A joint statement, shared by Chinese newspaper Shenzhen Special Zone Daily, on behalf of the more than 40 companies involved in the transaction said the sale is a “market-driven investment made to save Honor’s industry chain.” After the change of ownership, Honor will continue as usual, with no impact on production expected.
Ever since Huawei was placed on the U.S. Commerce Department’s “Entity List,” the company has found it difficult to operate its consumer hardware business. The company has adapted about as well as it could, but it’s increasingly facing tougher challenges due to increasing restrictions by the U.S. For instance, since the U.S. effectively blocked many chipmakers from supplying to Huawei, the company will be unable to have its ARM-based SoC designs fabricated by contract chipmakers like TSMC. As such, the Kirin 9000 found in the Huawei Mate 40 series is expected to be Huawei’s last self-designed high-end Kirin silicon, and the company will have to turn to 4G chipsets from competitors like Qualcomm or hope that China’s semiconductor manufacturing industry can step up.
If Huawei seeks to become fully independent from US-based companies, then it’ll need a lot of cash to make that happen. The deal to sell Honor could be the cash infusion that Huawei needs for this effort. No figure for the transaction was revealed, but a previous report claimed it was in the region of $15.2 billion. The previous report also claimed that the consortium’s goal after purchasing Honor would be to take the company public within three years.
With the sale now complete, Huawei will allegedly put its focus on continuing to make high-end smartphones and its corporate-oriented business. Honor, meanwhile, will continue to cater to the mid-range market across the globe.
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