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Huawei to sell Honor brand to ensure survival of supply chain

Huawei has signed a deal with Shenzhen Zhixin New Information Technology Co., Ltd. to sell all business assets related to its Honor mobile phone brand to over 30 agents and dealers of the Honor brand, according to the company’s statement on Tuesday.

The deal, first proposed by the over 30 agents and dealers, has been made by Honor’s industry chain to “ensure its own survival,” according to the statement, and is expected to help Honor’s channel sellers and suppliers through the tough time.

The change of ownership will not impact Honor’s development direction, based on a joint statement between Huawei and the agents and dealers of the Honor brand. Meanwhile, once the sale is complete, Huawei will “not hold any shares or be involved in any business management or decision-making activities in the new Honor company.”

“Huawei’s consumer business has been under tremendous pressure as of late,” said the Chinese tech giant, attributing it to “persistent unavailability of technical elements needed for our mobile phone business.”

“We hope this new Honor company will embark on a new road of honor with its shareholders, partners, and employees,” the statement cited.

No figure for the deal was given in the statement.

Screenshot of Huawei’s statement

Screenshot of Huawei’s statement

“Honor’s suppliers, manufacturers, distributors and channel sellers are all facing significant difficulties. If not handled well, over a million people could lose their jobs. Honor’s independence from Huawei is expected to ensure that ‘the water will continue to flow in Honor’s channel’ and saves the phone maker’s upstream and downstream suppliers,” according to sources close to the deal.

Established in 2013, Honor is Huawei’s low and middle-end consumer electronics brand aimed at the youth market. Since its establishment, it has been a relatively independent unit under Huawei, and it has no stake in the international 5G competition, according to analysts.

Qualcomm received a license from the U.S. government last week to sell some of its products to Huawei, including 4G chips, so do other U.S. chip companies such as Intel, AMD, and Skyworks. 

As the global leader in 5G technologies, Huawei’s potential to design its own chips was thwarted since September by the U.S. trade restrictions that banned all U.S. companies from supplying components and software to the global leader in 5G technologies. 

In the first nine months this year, Huawei grossed 671.3 billion yuan ($100.7 billion) in revenue, up 9.9 percent year on year but down from 24.4 percent growth over the same period last year. 

Read more: Can Huawei survive the U.S. ban?

(Cover: Huawei smart city pavilion at the 22nd China Hi-tech Fair, November 13, 2020. /CFP)

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