Huawei could sell Honor in order to afford some air in these times of crisis. The Chinese giant would discuss with Xiaomi, TCL or even Digital China to sell its brand up to 3.7 billion euros.
The spokespersons can try to reassure, the succession of events in progress is a bad omen for the future of Huawei. After analyst Kuo Ming-chi, it is Reuters' turn to discuss a possible sale of the Honor brand by Huawei. The Chinese giant, affected by an American embargo, is said to be in discussions with other Chinese manufacturers in order to sell Honor. The news agency mentions an agreement that could amount to up to 3.17 billion euros. Enough to replenish the coffers of the struggling giant in these times of crisis
Xiaomi, TCL and Digital China on the bridge
According to Reuters sources, Huawei would like to focus on the high-end market, represented by the P and Mate ranges, by abandoning the entry-level market embodied by Honor. The sale would concern the Honor brand, its research and development departments as well as the related production agreements. The deal would be between 15 and 25 billion yuan, or between 1.9 and 3.17 billion euros. Three candidates would be in the running to afford the popular brand with younger generations. These are Digital China, the main distributor of Honor in China, operating mainly in the Middle Kingdom, Xiaomi and TCL. Obviously, the latter two, already widely engaged in the smartphone market, do not comment on this situation.
According to figures from the analysis firm Canalys, Honor smartphones represented 26% of mobile phones delivered worldwide by Huawei in the second quarter of 2020. Some 14.6 million units. If this volume seems significant, the company records little margin on entry-level devices. Thus, the Honor branch only concentrates 7% of the revenues of the smartphone branch last year.
"A win-win situation"
For his part, Kuo Ming-chi considers this strategy relevant. "If Honor were to become independent from Huawei, its suppliers would no longer be subject to the US embargo on Huawei. This would help not only Honor but also its suppliers. It would be a win-win situation.", assures the analyst citing Ségolène Royal unwittingly. Still, Honor depends largely on the subsidiaries of its parent company at present. Thus, HiSilicon supplies the majority of its chips. Its connected watches are also inspired by Huawei models. If the brand were to become independent from its creator, it would also have to obtain US authorization to work with its former owner. It will then be obliged to reorganize to relaunch itself.