Chinese tech company Huawei is set to sell its major mobile phone brand, Honor, which caters to the budget section of smartphones. Huawei’s decision to sell one of its major brands is seen as an effort to rescue the struggling business from damaging US sanctions imposed on it and the boycott in many countries over security concerns.
The company announced the sale on Tuesday and aims to revive Honor by separating it from Huawei’s network equipment business. Huawei’s network equipment business which has expanded across the world for over two decades, has seen resistence from many countries in Asia, Europe and America in recent years owning to security concerns and the control of the Chinese Communist Party over the company’s functioning and policies.
Honor will be owned by a newly-formed consortium of 40 partners and government-backed businesses called Shenzhen Zhixin New Information Technology Co. Neither the consortium nor Huawei have disclosed the terms and the price of the deal but Reuters reported earlier this month that the proposed Honor sale could reach 100 billion yuan ($15.2 billion).
Regarding the sale of Honor phones, Huawei says the decision “has been made by Honor’s industry chain to ensure its own survival,” following “tremendous pressure” and “a persistent unavailability of technical elements needed for our mobile phone business.” Ever since Huawei was placed on the U.S. Commerce Department’s “Entity List,” the company has found it difficult to operate its consumer hardware business which includes brands like Honor. Honor products rely heavily on Huawei’s technology. The US sanctions have hit the company hard as it prevents it from doing business with American companies.
The US has categorcially stated that Huawei’s equipment are a security threat and has decided not to allow it for its 5G trials. The Trump administration imposed sanctions on the company for being opaque in its operations due to which access to most U.S. processor chips and other technology is blocked. Several European countries including France, Sweden have banned Huawei from 5G trials. The United Kingdom and Australia are other major countries which have banned the Chinese tech giant from participating in 5G trials.
India is yet to take a call on restricting Huawei from its 5G trials. India’s Telecom Minister Ravi Shankar Prasad had earlier said India has its security issues over allowing Huawei to participate in the upcoming 5G trials. However, Huawei has denied the accusation of various countries and instead blames US for forcing other countries to ban it.