Chinese smartphone giant Huawei will sell its sub-brand Honor to a consortium formed by the Shenzhen local government.
Honor accounts for around 30% of Huawei’s smartphone shipment, or around 70 million units a year, and the move will dent the Chinese tech giant’s hope of surpassing Samsung Electronics to become the world’s largest smartphone maker.
Huawei said on Tuesday that it will sell all of its Honor business assets to Shenzhen Zhixin New Information Technology.
Huawei claimed that “the move has been made by Honor's industry chain to ensure its own survival. Over 30 agents and dealers of the Honor brand first proposed this acquisition.”
But Shenzhen Smart City Technology Development Group, a wholly-owned subsidiary of the Shenzhen City Government, owns a 98.6% stake in Shenzhen Zhixin New Information Technology, data from local company information site QCC shows.
The over 30 agents and dealers likely own a 1.4% stake of Shenzhen Zhixin New Information Technology at most.
It is more likely that the Shenzhen government is aiding Huawei from the company’s recent troubles caused by US sanctions against it.
“Huawei's consumer business has been under tremendous pressure as of late. This has been due to a persistent unavailability of technical elements needed for our mobile phone business,” the Chinese tech giant said, referring to the recent bands that prevent it from acquiring components made with US technology.