Huawei Technologies Co (華為) sold its Honor Terminal Co (榮耀) smartphone business to a Chinese government-backed consortium for an undisclosed amount, hiving off the entry-level devices arm after US President Donald Trump’s administration cut off its access to US technology.
The consortium was formed by the Shenzhen Smart City Technology Development Group Co (深圳智慧城市科技發展集團), and more than 30 of Honor’s partners, agents and dealers, from private giants such as Suning.com Co (蘇寧易購) to government-affiliated entities such as a branch of China Postal and Telecommunications.
Huawei will no longer hold any shares in Honor after the transaction.
The deal could help augment a brand that has gained popularity among younger budget-conscious users in recent years and made headway in overseas markets like Europe. It is unclear if the Honor spin-off would lead to a resumption of US chip supply to its new owners.
“This move has been made by Honor’s industry chain to ensure its own survival,” the company said in a statement. “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.”
Honor was an integral part of Huawei’s smartphone business, once larger than Samsung Electronics Co’s, but now struggling to secure enough crucial components and software for production.
The sale illustrates the uneven impact of White House sanctions on China’s largest technology firm, whose consumer business is ailing even as its networking unit soldiers on.
Shenzhen-based Huawei is said to have safeguarded its core telecom equipment business by stockpiling critical components to continue supplying its home country’s 5G rollout through at least next year.
Citing national security risks, the US has waged a far-ranging campaign against Huawei since 2018 that landed its chief financial officer, Meng Wanzhou (孟晚舟), under house arrest in Canada and fomented bans against the use of the company’s 5G equipment in countries from the UK to Japan.
The final blow came when the White House enacted sweeping restrictions against suppliers this year, closing off loopholes that let Huawei procure ready-made semiconductors to keep its consumer business afloat.
Honor’s other new owners include local corporations such as Shenzhen Expressway Co (深圳高速公路) and Shenzhen Energy Corp (深圳能源).
It can lean on Suning, the nation’s largest electronics chain backed by Alibaba Group Holding Ltd (阿里巴巴), to help enhance distribution.
“The change in ownership will not impact Honor’s development direction or the stability of its executive and talent teams,” the company said in a statement to local newspapers. “It is the best solution to protect the interests of Honor’s consumers, channel sellers, suppliers, partners and employees.”
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