The consortium was formed by the Shenzhen Smart City Technology Development Group Co. and more than 30 of Honor's partners, agents and dealers, from private giants such as Suning.com Co.to government-affiliated entities such as a branch of China Postal and Telecommunications. However, the move to sell Honor could indicate Huawei is still unsure of its future prospects. Analysts say if Honor is not sold, the challenges faced by its industry chain might result in around a million people losing their jobs around the world.
Following reports of Honor's imminent sale, parent company Huawei has made the news official.
Established in 2013, Honor is Huawei's low- and middle- end consumer electronics brand aimed at the youth market.
Honor shipped around 68.7 million handsets in 2019, according to research agency Counterpoint, roughly 28.7% of Huawei's smartphone shipments of 238.7 million units past year. A spin-out can in theory exempt Honor from the supply chain restrictions that have struck Huawei hard.
Economists and political analysts expect little change in US policy toward China under President-elect Joe Biden due to widespread frustration with Beijing over trade and technology.
The sale appears aimed at getting Honor out from under the Huawei umbrella, thereby allowing the brand to source components without being affected by the United States sanctions.
But getting to that stage takes time, and in the interim there are competitors lining up to take Huawei's place on the global smartphone stage.
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They also see Chinese government-supported technology development as a threat to USA industrial dominance.
With Huawei relinquishing its control, there's a chance that Honor will be able to operate on an even playing field like other Chinese smartphone makers.
Neither Huawei nor the buyers disclosed the details of the deal, but about 7,000 employees will be moved from Honor to the new company, according to a person familiar with the matter. The new owners also assured that the change of ownership will not affect Honor's development direction or the stability of its executive and talent teams.
Huawei sold 51.9 million handsets in the third quarter, according to industry trackers IDC.
Huawei is allowed to use Google's Android operating system because it is open source and involves no commercial transaction with the American company.
Huawei says it has removed USA components from its core products, but the president of its consumer unit, Richard Yu, warned in August the company was running out of chips for smartphones.