Huawei is selling its budget, youth brand Honor in an effort to help it survive in the face of US trade restrictions, the company has announced.
Whilst under Huawei ownership, Honor has suffered the same sanctions as its parent company, finding its access to US technology limited, due to national security concerns from the US government.
The deal will give the brand a chance to strike out from the sticky Huawei-US situation, and find solid footing away from the political furore; that means access to Google Play services that have been locked away from Huawei since the Trump administration put the kibosh on dealings with the company.
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Honor will be sold to Shenzhen Zhixin New Information Technology, a new company comprised of over 30 agents and dealers of the brand. Huawei has made it clear that it won't hold any shares in Honor post-sale, and the hope is that the decision to sell will help Honor to survive in the long-term.
In a statement (via Reuters), Huawei explained that it's been under “tremendous pressure” because of the “persistent unavailability of technical elements” it needs to manufacture its smartphones, so selling off Honor will buy the Chinese company a little “breathing room”.
Should trade relations with the US improve in the coming years, it also makes it easier for Huawei to reacquire the brand. Analyst Will Wong, from IDC, says:
“It will be easier for Huawei to make a potential buyback in the future from this consortium, which might not be so easy if they sell it to other smartphone or electronics makers."
Figures for the sale haven't been disclosed yet, but earlier this year, Reuters reported that Huawei was in talks to sell Honor in a 100 billion yuan ($15.2 billion/ £11.5 billion) sale, so it's likely this new deal will sit somewhere in that vicinity, giving Huawei an injection of cash to invest in its own technology so it's not so reliant on the US for parts.
It's no secret that the Kirin chips used in Huawei's handsets, made by Taiwan Semiconductor Manufacturing Co. (TSMC) using US equipment, have been hard to come by since TSMC stopped accepting orders from the company back in May (via The Japan Times).
If Huawei can produce its own alternative, it'll alleviate some of the pressure the business has been under since all of this kicked off.
In the meantime, Honor could be free of the restrictions imposed on Huawei, meaning smartphones like the Honor View 20 – a mid-range flagship that's perfect for young professionals – will be an attractive proposition once again.
