Huawei to Sell Its Budget Honor Brand for $15B to Digital China and Others

(Source: themrphone)

Huawei is selling its low-budget smartphone line Honor brand to a consortium including Chinese IT provider Digital China, three state-owned companies and electronics company TCL in a 100 billion yuan ($15.2 billion) deal, according to a Reuters report. 

The news coincides with the rumor spread in October that said Huawei was in talks with suitors to sell parts of its Honor smartphone business, due to US sanctions tightening Huawei’s chip supplies. The separation of Honor’s mid-range smartphone business from its mother company could free the brand from the supply limitation and open up new potentials for Honor, seasoned Apple analyst Ming-Chi Kuo said. 

According to the Reuters report, the deal will include almost all Honor assets including its brand, research & development capabilities and supply chain management. 

Huawei’s budget-friendly Honor smartphones featuring stylish designs are popular among young people. Honor accounted for 26% of Huawei’s 55.8 million total smartphone shipments in the second quarter this year. Honor’s products also include laptops, tablet computers, smart TVs and electronic accessories.

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The top-two shareholder Digital China also partnered with Huawei in other businesses such as cloud computing and it plans to foot the bulk of the deal with bank loans, according to the Reuters report. 

According to the Reuters report, sources said that Honor planned to retain most of its management team and 7,000-plus workforce after the sale, and will go public in three years.