Huawei said to be in talks to sell its Honor Smartphone business including as the company has started resetting its priorities in the face of US sanctions and will focus on its higher-end Huawei phones sources said.
The assets to be sold have yet to be finalised but could include Honor’s brand, research & development capabilities and related supply chain management business. The deal could fetch up to CNY 25 billion (roughly Rs. 27,233 crores), people said
Huawei is one of the top 3 largest smartphone makers and 5th largest in Research and Development. IT has a vast business line form telecom to networking and most ahead in 5G race. But everything changed for them after the U.S. Ban. Until now everything was fine for them, considering the ban they have even started making their own OS called Harmony OS based on AOSP.
They divided their products into brands first Huawei itself and Honor. Honour was chosen as its easier to pronounce for Western Countries. The Honor phones were targeted for young and budget-friendly customers.
Huawei established the Honor brand in 2013 but the business mostly operates independently from its parent. Honor brand is mainly aimed for budget section, highly competitive in competition with Oppo, Xiaomi and Vivo in China’s highly competitive budget phone market and its phones are also sold in Southeast Asia and Europe.
Whereas, the Huawei branded phones are meant to targeted for business people and tech-enthusiastic people.
Fast Forward to Today
Huawei is deciding to sell its Honor Smartphone business including as the company has started resetting its priorities in the face of US sanctions and will focus on its higher-end Huawei phones. The assets to be sold have yet to be finalised but could include Honor’s brand, research & development capabilities and related supply chain management business, two of the people said.
The deal may be an all-cash sale and could end up smaller, worth somewhere around CNY 15 billion (roughly Rs. 16,346 crores) to CNY 25 billion (roughly Rs. 27,233 crores)told by their spokesperson
Digital China, the main distributor for Honor phones, emerged as the frontrunner but other prospective buyers include Chinese electronics maker TCL and rival smartphone maker Xiaomi Corp, the people said, declining to be identified as the talks were confidential.
If Huawei sells Honor smartphone business it would be a win-win situation for the Honor brand, its suppliers and China’s electronics industry.
If Honor is independent from Huawei, its purchase of components will no longer be subject to the US ban on Huawei. This will help Honor’s smartphone business and the supplierswrote in a research note last week.
Considering the budget market Honor booked less than CNY 5 billion (roughly Rs. 5,448 crores) in net profit on revenue of about CNY 70 billion (roughly Rs. 76,309 crores) – 80 billion (roughly Rs. 87,210 crores) last year. As it is based on a thin margin. If the bid becomes successful then, Digital China, who is also a partner in cloud computing and other businesses with Huawei, plans to finance the bulk of deal with bank loans and is set to secure the financing in the coming weeks, the people said.