Huawei Reported to Sell x86 Server Division

Huawei was in advanced talks to sell its x86 server business, Bloomberg reported on Tuesday, citing people familiar with the matter. Huawei declined to comment.

The precise value of the deal couldn’t be learned, but it’s likely in the billions of yuan, the source said. Henan Information Industry Investment Co. Ltd., a Zhengzhou-based state-owned firm that has been a partner of Huawei’s server business, is a leading contender, one of the people said.

In addition, consumer electronics maker Huaqin Technology Co. Ltd. and an asset management company representing the Hubei provincial government, are involved in the talks, the people said. It’s unclear if the companies are bidding separately or as part of the same consortium.

In the first half of this year, news emerged that Huawei would sell its server product line to Suzhou SASAC (State-owned Assets Supervision and Administration Commission). Huawei insiders said that Huawei would not give up its server business, but its production has been blocked as of late.

Huawei has been the target of the USA government’s strong arming since September last year, facing restrictions on several of its businesses in that market. But some American companies have been approved by the US government to supply Huawei, such as Intel and AMD. At present, AMD and Intel chips are being used in Huawei’s laptop products, but it’s unknown which chips are being used in their servers. Huawei also released the latest generation of FusionServer Pro V6 intelligent server based on the third generation Intel Xeon scalable processor in April.

In addition, some media outlets have said that the cooperation between Intel and Huawei has not officially resumed. Only specific products of Intel and AMD have been approved to be supplied to Huawei. But there is no doubt that Huawei is facing the problem of chip production at present.

On October 29, Huawei announced its operating performance report for the first three quarters of 2021. The report shows that Huawei achieved sales revenue of 455.8 billion yuan in the first three quarters, down 32.1% year-on-year. The net profit margin was 10.2%. Guo Ping, the rotating chairman of Huawei, said: “The overall operating results are in line with expectations. Our business facing consumers has been greatly affected, while the business facing enterprises has performed stably.”

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According to IDC’s data, in the first half of 2021, China’s overall server market maintained steady growth in shipments and manufacturer sales. About 1.706 million servers were shipped, an increase of 8.9% year-on-year. The market size was $10.81 billion, up 12.1% year-on-year. Among them, 1.672 million x86 servers were shipped, an increase of 8.0% year-on-year. Its market size was $10.49 billion, up 12.6% year-on-year.