Huawei Technologies Co Ltd is in talks with Digital China Group Co Ltd and other suitors to sell parts of its Honor smartphone unit in a deal that could fetch up to 25 billion yuan ($3.7 billion), people with knowledge of the matter said.
FILE PHOTO: Huawei's new Honor 20 smartphone is seen at a product launch event in London, Britain, May 21, 2019. REUTERS/Peter Nicholls/File Photo
The deal may be an all-cash sale and could end up smaller, worth somewhere between 15 billion yuan and 25 billion yuan, one of the people said. The Honor brand was established by Huawei in 2013 but the business mostly operates independently from its parent.Kuo Ming-chi, an analyst at TF International Securities, has said that any sale by Huawei of the Honor smartphone business would be a win-win situation for the Honor brand, its suppliers and China’s electronics industry.
In May, Washington announced new rules aimed at constricting Huawei’s ability to procure crucial chips that it designs for 5G networking gear and smartphones. But margins for lower-end phones can be razor thin, and Honor booked less than 5 billion yuan in net profit on revenue of about 70-80 billion yuan last year, said one of the people.
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