Huawei Plans to Sale its Subsidiary Company Honor to Xiaomi or TCL

Huawei Smartphone Manufacturer is in danger: its subsidiary Honor is for sale

More and more insistent rumors of Huawei Smartphone manufacturers to sell its Subsidiary Honor. Huawei is already in negotiations with several buyers like TCL and Xiaomi. As you probably know, Huawei has been the target of heavy US sanctions for over a year. The Trump administration fears that the automaker is in the pay of the Chinese government and has therefore blacklisted the company. As a result, Huawei can no longer work with American companies or with any company using American technologies.

Also Read: Huawei to Reduce the number of phones produced in 2021

A particularly catastrophic situation, since Huawei can no longer obtain components from its usual partners such as the founder TSMC or even Samsung. As of September 15, TSMC no longer manufactures Kirin chips for Huawei. The manufacturer, therefore, finds itself in a shortage of processors, and could eventually abandon the sale of smartphones if the situation does not improve in the coming months.

Why Honor is on Sale?

As you may know, Honor is a subsidiary of Huawei and produces cheaper smartphones dedicated primarily to younger customers. Being linked to Huawei, the brand is also a victim of US sanctions. Only, Honor could get out of it faster than expected. Indeed, the Shenzhen firm plans to sell certain activities of Honor, in particular the Honor brand, the Research and Development division, then the teams responsible for the supply chain.

Who will buy Honor?

Several Chinese companies have already expressed their interest in this offer, such as Xiaomi, TLC, or the company specializing in digital services Digital China. The transaction could earn Huawei between 1.8 billion and 3.1 billion euros. By choosing to resell part of Honor only, this would allow the subsidiary to come out of the fold of US sanctions.

A resale to circumvent US sanctions

Indeed, the potential buyers mentioned above are not subject to the restrictions set by the American authorities. In fact, Honor could once again stock up on components and resume normal activities. ” If Honor is independent of Huawei, its component purchases will no longer be subject to US rules that affect Huawei,” said analyst Ming-Chi Kuo of the company TF International Securities.

In addition and as specified above, this operation would allow Huawei to partially replenish its coffers. As a reminder, Huawei’s losses are estimated at more than 9.1 billion euros since the entry into force of US sanctions.