Facing considerable challenges from U.S. technology sanctions, Huawei is reportedly considering restructuring its smartphone division, which has experienced setbacks due to difficulties in acquiring essential semiconductor components and software.

According to a report from Reuters on Wednesday, the Chinese technology company is currently engaged in discussions with Digital China Group regarding the potential sale of portions of Honor, its line of affordable smartphones, for a valuation between 15 and 25 billion yuan ($2.2 to $3.7 billion).

Digital China, a company listed on the Hong Kong stock exchange, originated as a division of the Legend Group (which later became Lenovo) and maintains a strong relationship with Huawei as a key distributor and partner.

Currently, the majority of Huawei’s income is generated through the sales of smartphones and other consumer electronics, a shift from its origins in the late 1980s as a provider of telecommunications equipment.

This development follows reports from a Chinese technology news blogger suggesting Huawei was contemplating the sale of Honor. Furthermore, Ming-Chi Kuo, a well-known analyst specializing in Apple, indicated in a recent analysis that separating from Honor would allow the sub-brand to avoid trade limitations, enabling Huawei to concentrate on its flagship smartphone offerings under its primary brand.

Individuals with knowledge of Huawei’s internal operations previously refuted the possibility of selling Honor, as reported by Tencent News last week. When contacted for a statement, a Huawei spokesperson did not provide a comment to TechCrunch.

Huawei initially launched the Honor brand in 2011 in response to the growing popularity of Xiaomi’s budget-friendly phones in China. Similar to Xiaomi, Honor initially prioritized online sales channels and targeted younger demographics. Since then, Oppo, Vivo, and Realme, all part of the BBK Group, have also gained substantial market share in the affordable smartphone sector.

Sources indicate that the potential sale could encompass Honor’s brand identity, its research and development resources, and its associated supply chain management operations. The technology blogger also stated that Honor would function and source materials independently following any sale.

Reuters has identified Xiaomi and TCL as additional potential buyers, while the tech news blogger also mentioned Gree and BYD as possible contenders.