Huawei, which suffers greatly from the restrictions imposed by the US government, is considering selling its subsidiary Honor to avoid the numerous bans from the White House.
After being deprived of Android at the start of the year, Huawei’s prospects in the Western market are shrinking: the Chinese manufacturer can no longer use components produced by its partners. The screens, processors and memories that integrate Huawei products indeed use American technologies.
In search of the white knight
Under these conditions, Huawei is looking for a lifeline for Honor, which suffers from the obstacles put in place by the American administration. The brand, created in 2013 to target a younger clientele on a tight budget, uses the know-how of the parent company while reducing costs. According to Reuters, Huawei wants to focus on the high end and continue the development of its alternative operating system HarmonyOS, and would sell its assets in Honor.
Leaving the fold of Huawei would allow Honor to re-purchase components produced by Huawei suppliers, without suffering the wrath of the White House. The brand could then bounce back and continue to grab market share, in sectors – entry and mid-range – very competitive. In the second quarter, Honor sold 14.6 million smartphones, or 26% of the 55.8 million units sold by Huawei.
Huawei has approached several potential buyers, including TCL and Xiaomi. But it’s Digital China, the main distributor of Honor smartphones, that seems to be off to a good start. The deal, valued at $ 3.7 billion, includes not only the Honor brand, but also its R&D capabilities and the production line.