Huawei, put in trouble by US sanctions, sells its Honor brand

The private group based in Shenzhen (southern China) is in the sights of President Donald Trump who suspects it of potential spying for the benefit of Beijing, which the company denies.

Huawei, one of the three largest smartphone manufacturers in the world, was blacklisted last year by Washington in order to prevent it from acquiring essential American technologies and components for its phones.

Honor, an entry-level brand, was bought by a consortium of 40 Chinese companies comprising distributors, agents and other companies whose survival depends on that of the brand, Huawei and the consortium said on Tuesday in reports. separate releases.

The Chinese telecom giant says that its production of consumer devices “is under terrible pressure” because of US sanctions.

“The sale will help Honor vendors and suppliers overcome this difficult time,” said Huawei, hoping that by stepping out of the group’s orbit, the brand will be able to resume component supplies.

This operation is the latest sign that American sanctions are weighing heavily on the activities of Huawei, the world leader in telecom network equipment.

Honor, a brand aimed primarily at young people and on a budget, according to Huawei sells some 70 million phones per year. After this sale, Huawei no longer has any shares and “is no longer involved in the management of the business or in the decision-making of the new company Honor”, he said.

The Trump administration has taken steps to drive Huawei out of the U.S. market, to deter U.S. companies from collaborating with it, and to cut off its global supply of semiconductors and other components.

The military past of the company’s founder, Ren Zhengfei, as well as his membership in the Chinese Communist Party, fueled suspicions about Beijing’s influence on the group.

Washington has also increased the pressure on its allies to ban Huawei’s 5G equipment.

The Chinese company has always firmly denied the accusations of the Trump administration, and attributes the offensive to which it is subject to the desire of the United States to eliminate a powerful competitor.

In fact, the sale of Honor will probably weigh down the manufacturer in its race for global sales of smartphones, against its South Korean competitors Samsung and American Apple.

Huawei had become the world number one in the second quarter of 2020, before falling back to second place in the third quarter, according to the research firm Canalys.

“Best solution”

“This acquisition is an investment dictated by the market, in order to save Honor’s industrial chain,” the consortium of buyers said on Tuesday.

“It is the best solution to protect the interests of consumers, vendors, suppliers, partners and employees of Honor.”

Buyers include listed companies, including Chinese retail and online giant Suning.com.

Bad news has accumulated in recent weeks for Huawei.

At the end of October, the group reported a sharp slowdown in its turnover over nine months.

It was also excluded from Sweden’s future 5G network after a similar move in the UK this summer. The Swedish justice, however, suspended this exclusion pending a decision on the merits.

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