Huawei plans to divest budget phone unit Honor

Huawei Said to Be in Talks to Sell Parts of Its Honor Smartphone Business

Huawei Said to Be in Talks to Sell Parts of Its Honor Smartphone Business

Besieged by USA tech sanctions, Huawei may be looking to shake up its smartphone business that has taken a hit after losing core semiconductor parts and software services.

However, a new report by Reuters appeared today, saying the phone manufacturer is in talks with a company called Digital China to offload parts of the smartphone business of its sub-brand in a deal worth CNY15 billion - CNY25 billion ($2.2 billion - $3.7 billion). That report was instantly refuted by the Chinese tech giant.

The frontrunner, Digital China is an offshoot of Legend Holdings which later transformed to Lenovo in 2001. we cant say if Digital China group is still a part of the Lenovo holdings but the company has been the main distributor for Honor phones before now. A Huawei representative contacted by TechCrunch declined to comment.

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In his essay, Ming-chi Kuo noted that if Huawei sells the Honor mobile phone business, it will be a win-win situation for Honor brands, suppliers and China's electronics industry. Rather interestingly, competitors TCL and Xiaomi have also thrown their hats in the ring, although Digital China remains the front-runner for now.

Huawei rolled out independent brand Honor in 2011 as Xiaomi's low-budget phones were taking China by storm. "This will help Honor's smartphone business and the suppliers", he wrote in a research note last week.

The budget phone industry operates on thin margins and Honor booked less than CNY 5 billion (roughly Rs. 5,448 crores) in net profit on revenue of about CNY 70 billion (roughly Rs. 76,309 crores) - 80 billion (roughly Rs. 87,210 croes) previous year, said one of the people.

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