Huawei has confirmed last week that it will sell all of its Honor business assets to a new consortium called Shenzhen Zhixin New Information Technology. The decision was made due to mounting pressure as the youth-centric smartphone brand is also affected by restrictions imposed by the US government.
As reported by Reuters, the Chinese tech giant’s founder, Ren Zhengfei, had shared a post in a Huawei employee forum calling on Honor to be Huawei’s biggest competitor after the “divorce”. He said toppling Huawei should be their slogan for motivation.
Ren also said that “Wave after wave of severe U.S. sanctions against Huawei has led us to finally understand, certain American politicians want to kill us, not just correct us.”
He shared that while Huawei could overcome the difficulties, the “millions” of employees at Honor’s agents and distributors around the world would lose their jobs as sales channels dried up. He said “We don’t have to drag innocent people into the water just because we suffer.”
It is reported that Honor-branded smartphones contributed 26% of the total 51.7 million smartphone shipped by Huawei in Q3 2020 based on data from Canalys. Apart from smartphones, Honor also produces laptops, wearables and smart IoT devices which include a Smart TV.
With Huawei disposing its interest in Honor, the youth-centric brand is expected to regain official access to software and services from US firms which include Google Mobile Services. As a fully independent brand, Honor could possibly manufacture new 5G phones with chips from Qualcomm and MediaTek.
However, it is yet to be seen how soon this transition can take place as Honor’s current supply chain is closely tied to Huawei from manufacturing to distribution. With the new consortium that consists of over 30 agents and dealers taking control of the Honor brand, they would probably face an uphill task to convince US authorities that it is no longer affiliated to Huawei and doesn’t pose a threat to US national security.
With the change of administration in the US, there’s a glimmer of hope that restrictions on Huawei may be loosened gradually. It was recently reported that Qualcomm has been permitted to sell select mobile chips to Huawei without 5G. Samsung Display has also gotten license from the US government to supply its panels to Huawei. Interestingly, Huawei and Honor’s laptop business are not affected as they could continue to manufacture Intel and AMD machines with Microsoft Windows pre-installed.
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