Huawei may be selling off Honor unit to the Shenzhen government

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Huawei sells off phone unit to Chinese Government

The latest about Huawei doesn’t really come as a shock. It’s something expected: Huawei selling off its Honor phone unit. But then we didn’t think it would be selling to the Shenzhen government. Nothing is final and official yet but the top Chinese mobile OEM is planning to sell to the government its Honor unit. The price? 100 billion yuan which is about $15 billion. The deal is led by Digital China and is believed to be underway according to sources.

Huawei is still being restricted by the US government. We’re not sure if things will change once a new president is elected. The company needs to do something because business is already affected. It’s not felt yet but with brands cutting their ties with Huawei, revenue will go down.

The second largest phone manufacturer in the world today wants to just focus on premium smartphones. It will still try to beat Samsung. However, it will be more difficult because Huawei can’t officially sell the phones as Android devices. While it runs EMUI which is still based on Android, it doesn’t come with the Google Play Store.

So far, we know it will be an ‘all-cash sale’. Huawei may include all assets from the brand to supply chain management to research & development. The official announcement may happen as early as Sunday.

In the future, the company may go public. The employees and the management team will be retained. It’s not certain what the new group will do to the Honor brand but it could take advantage of the IoT (Internet of Things) business. Note that Honor contributed about 26% of all the 51.7 million phones Huawei shipped during Q3 2021.

Digital China, the main distributor of Honor, will be the top-two shareholder once it is sold off. According to sources, Honor’s stake is almost 15%. It will be financing the deal with bank loans together with other investment firms. These firms are supported by Shenzen’s government of financial and technology hub.

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