Huawei plans to divest budget phone unit Honor

  • Huawei plans to divest budget phone unit Honor

Huawei plans to divest budget phone unit Honor

Earlier this month, noted Apple analyst Ming-Chi Kuo predicted that Huawei may sell off the Honor smartphone business in order to disentangle that brand from the effect of the U.S. sanction. Reuters reports that Huawei is looking to sell parts of its subdivision Honor to Digital China, Xiaomi, or TCL. The deal could fetch the tech giant up to 25 billion yuan ($3.7 billion). The analyst noted that if Honor is independent of Huawei, the procurement of parts will not be restricted by the USA ban on Huawei.

The prospective buyer here is Digital China Group, who are also the main distributors for Honor smartphones in the region.

It's still unclear which parts exactly Huawei wants to sell, but Reuters' sources say that they could include "Honor's brand, research & development capabilities, and related supply chain management business". A Huawei representative contacted by TechCrunch declined to comment.

The brand was established in 2013 and while it was initially sold as a phone line within the Huawei portfolio, lately it has been operating independently, releasing various gadgets on the global scene such as watches, earbuds, and laptops.

Huawei rolled out independent brand Honor in 2011 as Xiaomi's low-budget phones were taking China by storm.

"If Honor is independent from Huawei, its purchase of components will no longer be subject to the USA ban on Huawei".

The budget phone industry operates on thin margins and 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 croes) past year, said one of the people.