Huawei Sells Honor Phone Unit - State-Backed Firms Take Over

Following several weeks of speculation, Huawei has officially announced the sale of Honor to a group of businesses. This consortium includes companies supported by the government, Honor’s existing distribution network, and its suppliers, a strategic move designed to shield the Honor brand—known for its affordable devices—from the impact of U.S. trade restrictions.

The agreement was revealed through a collaborative statement published Tuesday morning in a Shenzhen-based newspaper. Upon finalization of the sale, Huawei will no longer possess any ownership stake in Honor, nor will it participate in the brand’s leadership or strategic choices; however, Honor’s current leadership structure and operational teams will be maintained.

According to the statement, signed by the 40 participating companies, “This transaction signifies an investment driven by market forces, undertaken to safeguard Honor’s supply network. It represents the optimal path forward to protect the interests of Honor’s customers, sales channels, suppliers, partners, and workforce.”

Huawei has faced significant disruptions to its access to key components and software following the imposition of trade sanctions by the U.S. government. Separating Honor, a brand initially created to compete with Xiaomi’s budget-friendly, online-focused smartphones, could potentially allow it to avoid the supply chain limitations that have severely affected Huawei.

Currently, no entity within the consortium appears to present a direct challenge to Huawei’s standing in the market. This arrangement provides Huawei with the flexibility to potentially reacquire Honor from the group of government-affiliated companies and mobile phone distributors in the future, should they choose to do so.

The consortium is comprised of organizations such as Shenzhen Smart City Technology Development Group, a government-supported entity focused on advancing technologies like cloud computing, 5G, and smart city solutions within state-owned enterprises; China Postal and Telecommunications Appliances, a state-owned distributor of telecommunications equipment; and prominent electronics retailers including Suning and Sundan.

While the financial details of the acquisition were not disclosed, Reuters has previously reported a potential valuation of 100 billion yuan ($15 billion).

This article has been updated to include additional details and to refine the headline for clarity, specifying that the buyers include “state-backed firms” rather than simply the “government”.