Huawei sells Honor phone brand amid US sanctions

Beijing (AP) – Chinese tech giant Huawei is selling an affordable Honor smartphone brand to save companies struggling with damage from US sanctions imposed on their parent company.

The sale announced on Tuesday aims to relaunch Honor by separating Honor from Huawei’s network equipment business. It is under sanctions for blocking access to most US processor chips and other technologies.

Huawei Technologies Ltd.’s announcement did not disclose financial details, but the company will lose ownership once the sale is completed. Huawei maintains its flagship Huawei smartphone brand.

The buyer is a group of Honor retailers, a state-owned company in Shenzhen, the southern city where Huawei is headquartered. Earlier reports of rumors that it could be sold cost as much as 100 billion yuan ($ 15 billion).

“This decision was taken by Honor’s industrial chain to ensure its survival,” a statement from Huawei said. The buyer said in another statement that the split was the “best solution” to protect customers and employees.

Huawei, China’s leading global tech brand and the largest maker of switching equipment used by telecom operators and internet companies, is at the heart of tensions between the United States and China over technology, security and espionage. This feud has spread to include the popular Chinese video app TikTok and the WeChat messaging service.

Economists and political analysts expect widespread discontent with Beijing over trade and technology to leave little change in US policy towards China under President-elect Joe Biden.

According to Nicole Peng of Canalys, Huawei is preparing for difficult times by focusing its resources on high-end smartphones.

Nicole Peng of Canalys said the sale was “arguably a sign of weakness”.

“This shows that Huawei knows the situation will not immediately change between China and the United States,” Penn said.

Tuesday’s announcement did not indicate Honor’s plans to regain access to other technology, including US chips and Google’s popular music, maps and other services. Other Chinese smartphone brands such as Xiaomi, Oppo and Vivo work without such restrictions.

“Theoretically, Honor is the same as any other Chinese OEM (manufacturer),” IDC’s Kiranjeet Kaur said in an email. However, he said it would take time for Honor to regain access to its suppliers and start its own R&D.

“The challenge is how quickly we can get rid of our reliance on Huawei and access all the relevant technology,” says Kaur.

U.S. security complaints focus on Huawei’s leadership role in next-generation networking equipment and communications technologies.

U.S. officials have said Huawei could help Chinese espionage, but the company denied it. They also see the technological development supported by the Chinese government as a threat to American industrial domination. The Trump administration is urging Europe and other allies to eliminate Huawei and other Chinese suppliers when upgrading its network.

Meanwhile, Huawei CFO Meng Wanzhou, the daughter of company founder Ren Zhengfei, has been arrested in Canada and handed over to the United States on charges related to possible sanctions against Iran. I fight.

Sanctions imposed last year have made Huawei inaccessible to most US processor chips and other technology. These became stricter in May when the White House banned manufacturers around the world from using American technology to make chips for Huawei, including those designed by their engineers.

The buyer is Shenzhen Zhixin New Information Technology Co. This is the Shenzhen Smart City Technology Development Group Co, founded by the city government to develop information technology infrastructure. Was founded by.

According to search engine Baidu, the search engine’s financial information service Aiqicha, smart city enterprises own 98.6% of Zhixin. According to a statement from a buyer, the remaining 40 investment groups include fee-based retailers.

Founded in 2013, Honor is one of the best-selling smartphone brands in the world. Huawei says it ships 70 million mobile phones a year.

According to Canalys, total shipments of Huawei and Honor mobile phones fell 5% year-on-year to 55.8 million units in the quarter ending June. Sales in China rose 8%, while overseas shipments fell 27%.

Huawei said total revenue for the last nine months of 2020 increased 9.9 percent to 671.3 billion yuan ($ 100.4 billion). The company said it was still profitable, albeit down from 13.1% growth in the first half of the year.

Huawei’s non-Chinese smartphone sales are suffering from the pre-installation ban on Google services, which many customers have come to expect. Huawei is open source and does not involve commercial transactions with US companies, so Google’s Android operating system is licensed.

Huawei has said it has removed U.S. components from its commodities, but President of Consumers Richard Yu warned in August that there was a shortage of smartphone chips.

Peng of Canalys said the honor may be able to align suppliers before the new US administration is put in place. Honor is smaller than Huawei and has no role in next-generation infrastructure, so it is unlikely to raise any security concerns, she said.

“It’s much less likely to be the target of the US government,” she said.


Sue reported from Hong Kong

Huawei sells Honor phone brand amid US sanctions

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