Huawei Sells Its Honor Division Due to Technological Restrictions

Chinese smartphone maker Huawei has had a hard time this year, as more restrictions and sanctions against it by the US and other countries have made it nearly impossible for the company to keep up and now it has sold off its Honor brand.

According to Huawei, the company has been under a lot of pressure to due to unavailability of a number of technical aspects that only make it difficult for it to maintain some of its assets in the long run.

The biggest cause for this has been the US government sanctions, which have restricted supplies to Huawei on the grounds that the firm is a national security threat. The company has also lost a number of clients with Europe, more especially Britain being one of them as they recently picked another supplier for their 5G network equipment.

The US government sanctions have definitely caused more harm for the Chinese company who has now left no choice but to sell some of its divisions with Honor being on them. Huawei said it would not hold any shares or be involved in managing the new Honor company.

Huawei announced the news recently in its press statement that it will soon sell off its major subsidiary smartphone business due to the ‘tremendous pressure’ it has been put under of late.

The Honor brand has been a leading smartphone e-brand under Huawei Group, focusing on mid-range products for younger consumers. Huawei says the decision “has been made by Honor’s industry chain to ensure its own survival,” following “tremendous pressure” and “a persistent unavailability of technical elements needed for our mobile phone business.”

The statement further read: Huawei Investment & Holding Co., Ltd. has thus decided to sell all of its Honor business assets to Shenzhen Zhixin New Information Technology Co., Ltd. This sale will help Honor’s channel sellers and suppliers make it through this difficult time.

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 has been forced to sell its Honor brand so as to survive the hard times

Since its creation in 2013, the Honor brand has focused on the youth market by offering phones in the low- to mid-end price range. Over the past 7-years, the brand became of the most sort after, shipping over 70 million units annually.

When the US first targeted Huawei, as part of the broader US-China trade war, the Chinese company thought the sanctions wouldn’t impact them that massively but as of now, a lot has changed for the founder Ren Zhengfei who told the BBC’s Asia Business correspondent Karishma Vaswani, ‘US cannot crush us’.

Honor’s phones rely heavily on Huawei technology, so selling the unit off is a sensible and strategic business decision. In fact, it is the only way for them to save the brand which could take on different other technological components to survive as Huawei tries to sort the current mess out.

Some analysts say that the reason behind the sell is to help Huawei raise enough capital to invest in its own chip-making technology since the US restrictions placed on them prevented certain US firms selling equipment to Huawei nearly impossible for the Chinese firm.

Even though it is a great move, developing your own chip-making business takes time and resources, which could derail Huawei as its competitors continue to grab most of its smartphone market during this difficult period.

How this plays out for Huawei is yet to be seen, but we hope the company regains its footing and comes back better than ever before. Aside from that, we also hope the company sorts out the ‘national security’ threat issue since there’s still doubt as to whether the reports are actually true or not.

Terms of the deal weren’t disclosed. Reuters reported earlier this month that a proposed Honor sale could reach 100 billion yuan ($15.2 billion).

 

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