Trade war restrictions force Huawei to sell off Honor business

Chinese giant cites 'persistent unavailability of technical elements' as the reason for selling its Honor sub-brand.
Written by Chris Duckett, Contributor

Huawei announced on Tuesday it has decided to sell its Honor sub-brand to Shenzhen Zhixin New Information Technology, in a deal where financial terms were not disclosed.

"Huawei's consumer business has been under tremendous pressure as of late. This has been due to a persistent unavailability of technical elements needed for our mobile phone business." the company said in a statement.

"This move has been made by Honor's industry chain to ensure its own survival. Over 30 agents and dealers of the Honor brand first proposed this acquisition."

The Chinese giant said once the deal was completed, Huawei would not "hold any shares or be involved in any business management or decision-making activities" to do with Honor.

Honor, a sub-brand that offers handsets from the mid-tier of the smartphone market down, has hit the milestone of selling over 70 million devices annually, Huawei said.

"We look forward to seeing Honor continue to create value for consumers and build a new intelligent world for young people," Huawei said.

The sale is the first major structural casualty inflicted on Huawei from the bans placed on it from Washington.

In September, rotating chairman Guo Ping said the company would continue to do everything it could to strengthen its supply chain, despite continuing to encounter "great pressure" and being continuously "attacked".

"Huawei is in a difficult situation these days. Non-stop aggression has put us under significant pressure," he said at the time.

"We're still assessing the specific impacts. Right now, survival is the goal.

"The US has been continuously attacking us and they have modified their laws for the third time, and that has posed great challenges to our production and operation."

Despite the rhetoric, in fiscal terms, Huawei has continued to grow.

In its third-quarter fiscal statement released last month, Huawei announced it saw revenue increase by 9.9% to 671 billion yuan.

"Throughout the first three quarters of 2020, Huawei's business results basically met expectations," it said.

"As the world grapples with COVID-19, Huawei's global supply chain is being put under intense pressure and its production and operations face significant challenges. The company continues to do its best to find solutions, survive and forge forward, and fulfill its obligations to customers and suppliers."

Over the weekend, Reuters reported the US had approved Qualcomm selling 4G chips for mobile phones to Huawei.

As a result of the Huawei bans, companies involved in the manufacturing or design of hardware using US technology need a licence to sell to the company.

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