Huawei to sell Honor smartphone business, Xioami is frontrunner

Huawei might sell off parts of its Honor subsidiary

Reuters reports that Huawei is looking to sell parts of its subdivision Honor to Digital China, Xiaomi, or TCL.

The company has made a decision to focus on its higher-end phones rather than the Honor brand aimed at young people and the budget-conscious.

The source clarified that the exact list of assets to be sold has not yet been determined, but it will necessarily include the Honor brand, research and development resources, and a supply chain management division.

Huawei can no longer find a sustainable way to maintain Honor's business prospects.

Chinese smartphone maker Oppo is seizing on the headwinds facing compatriot Huawei Technologies to pursue rapid growth in Europe, where it recently inked a deal with the EU's largest mobile carrier to sell 5G handsets.

As for now, the evaluation of its sale is not clear, but the deal, however, could amount to as much as 25 billion yuan (about $3.7 billion).

In August, Huawei admitted it is running low on mobile device components after the USA government enacted new sanctions restricting its access to American made technology.

Thus, representatives of the Chinese brand met with the Digital China Group, TCL, and Xiaomi Corp and discussed the prospect of selling parts of Honor.

Kuo Ming-chi, an analyst at TF International Securities, said, "If Honor is independent from Huawei, its purchase of components will no longer be subject to the USA ban on Huawei".

The Huawei smartphones could continue to fight for a piece of the market using the company's own app store and custom OS, but Honor devices don't have the power to compete since they are budget phones. Huawei has repeatedly denied being a national security risk.

Digital China, a Beijing-based electronics distributor, is in the lead to acquire Honor and its infrastructure. Past year they managed to become the second biggest smartphone maker in the world. Honor phones are also available in Southeast Asia and Europe.

Chinese smartphone maker Xiaomi Corp wants to become the No. 1 smartphone vendor in Europe in the next few years, edging out leading Chinese rival Huawei Technologies, which is now battling U.S. sanctions.

If successful in its bid, Digital China, which also partners with Huawei in cloud computing and other businesses, plans to finance the bulk of deal with bank loans and is set to secure the financing in the coming weeks, the people said.

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