Huawei reportedly selling Honor for £11.5 bn

Back in October, rumours began to fly that Huawei was looking to offload its smartphone business unit Honor for around 25 billion yuan (£2.9 billion). Today, reports suggest that a Chinese consortium may in fact pay around three times as much for the business, with estimates as high as 100 billion yaun (£11.5 billion).

 

Huawei first launched Honor back in 2013 as something of a budget smartphone range, targetting a different demographic to its parent company. Since then, the company has grown significantly at one point accounting for over 50% of Huawei’s overall smartphone shipments. However, this number has fallen; Canalys suggest that the sub-brand’s smartphones accounted for 26% of its 55.8 million device shipments in Q2 this year, while other anonymous sources have told Reuters that the company was only responsible for less than 5 billion yuan of Huawei’s 70–80 billion yuan profit in 2019.

 

While Honor’s decline was partly underway before 2020, it was the latest round of US sanctions, severing Huawei’s access to much of its semiconductor supply chain, that seems to have caused the most damage, with Reuters sources suggesting that the Chinese business was pessimistic that the situation would improve, even with the US presidency set to change hands.

 

However, there has been some relief on this front in recent weeks, however, with signs beginning to appear that the US will allocate licences to Huawei’s chip suppliers, so long as the products are not for use in 5G. In a sense, the US could soon allow Huawei’s smartphone business to avoid the main brunt of the sanctions. 

 

Honor’s buyers take the form of a consortium led by Huawei’s cloud-computing partner Digital China Group, which is reportedly set to take a 15% stake in the business. Reports suggest that additional investors will take the form of handful of three or more Shenzhen government-backed investment firms, each owning 10–15%. 

 

According to Reuters’ sources, Honor is expected to go public within three years. 

 

With the loss of its budget handset line, Huawei will seemingly focus on high-end handsets and corporate-targeted business.

 

Huawei continues to lose ground across Europe when it comes to its roles in 5G networks, most recently launching a legal challenge against Sweden, who banned the company from its 5G networks on security grounds.