Huawei is reportedly preparing to sell Honor’s mobile division to a consortium made up of, among others, its main distributor, Digital China, as well as local authorities in the city of Shenzhen.
This Sunday, Huawei could announce that it has sold its Honor smartphone division for 12.8 billion euros. In any case, this is what the Reuters news agency reports, which had previously announced a buyout at 3.15 billion euros.
A regrouping to save Honor
It would be a grouping of several entities which would thus buy Honor from the Huawei group. Among these, we especially retain Digital China. It is the main distributor of Honor smartphones, which is also working with Huawei on its services of cloud computing. The company could own 15% of Honor. To do this, the company would have made various bank loans according to two sources familiar with the matter. At least three other investment funds supported by the Chinese government would participate in this buyout to the tune of 10% to 15%. Finally, the city of Shenzhen would also be interested.
The roughly 7,000 employees at Honor would keep their jobs and the company could then go public within the next three years.
Remember that only the division of Honor dedicated to smartphones is mentioned here. The Huawei sub-brand also markets laptops as well as smartwatches. No information has been communicated on the future of these activities.
Why resell Honor?
Clearly, Huawei therefore does not expect much from the election of Joe Biden as head of the US government. The decisions of the Trump administration regarding the embargo affecting Huawei’s business should remain in place.
For this reason, Huawei is now looking to design its own SoCs in partnership with the Shanghai IC Research and Development Center, a non-profit organization supported by the Chinese government.
The resale of Honor’s mobile division could help fund this research. It must be said that currently, Huawei would be able to burn 20nm chipsets while among the competition, TMSC already provides 5nm SoCs to Apple and Qualcomm should present its work in this area with the early Snapdragon 875. December.
Currently Honor is subject to the same embargo as Huawei on the supply of components. On the one hand, after this resale, Honor could therefore freely continue its production. On the other hand, current Huawei suppliers would find part of their orders.
According to a study by Catalyst, in the second quarter, smartphones of the Honor brand represented 26% of all devices marketed by Huawei (55.8 million).