Huawei Sells Honor Brand Amid Tightening Trade Restrictions
(Credit: Kevin Frayer/Getty Images)Huawei has been battered by US trade restrictions in the last few years, and it’s going for a toll around the company’s long-term stability. Experts don’t expect a radical change when the new US administration involves power next year, so Huawei is starting to consider drastic action. It has sold its Honor sub-brand to a different entity backed by the local Chinese government, and Huawei may have zero ownership stake in the company moving forward. Which should allow Honor to become just another smartphone manufacturer that doesn’t have to deal with the intricacies of international relations.
Huawei founded Honor in 2021, and by 2021 it had been operating in additional than 70 countries. Huawei saw Honor includes a blank slate that could help it to expand into countries where consumers were less acquainted with Huawei. The organization focused totally on budget devices, however it took an extremely expansive view of that directive. A lot of Honor’s phones were modified versions of Huawei devices with a few features stripped out and a discounted tag.
When the united states Commerce Department took are designed for Huawei, the Chinese megacorporation suddenly found its expansion plans stymied. Honor hasn’t suffered the same negative brand consequences, but US companies still can’t forge deals with it. That means it’s affected by the chip shortages and lack of Google support for Android. Just a week ago, rumors began to circulate that Huawei was going to throw in the towel then sell Honor, and that’s precisely what happened.
According for an AP report, Huawei unloaded the distinction brand to a new holding company called Shenzhen Zhixin New Information Technology Co. This can be a firm owned at least in part through the government of Shenzhen. Huawei, meanwhile, will not own any shares in the new company. Even with government backing, Honor is not as likely to impress security concerns because it will be smaller and won’t be involved with 5G infrastructure. The facts from the sale aren't public, but rumors point to something locally of $15 billion. Huawei says Honor is selling 70 million smartphones per year, but analysts say Honor has seen a 27 % drop in sales internationally as Huawei’s position has worsened.
A government-owned Honor will probably make some buyers uneasy, but this sale frees Honor of all those pesky trade restrictions. It will likely be in a position to buy materials from US companies and even partner with Google to pre-load apps like Gmail and Maps on phones outside of China. Huawei has said it’s not having enough its custom Kirin mobile chips after TSMC was instructed to sever ties, but Honor is going to be permitted to purchase chips using their company companies. This might give it a chance to become a profitable smartphone maker without everything Huawei baggage.