(Reuters) – China’s Huawei Technologies Co. Ltd. is in early-stage talks to sell its premium smartphone brands P and Mate, two people directly aware of the matter said, a move that would eventually see the company go high- The end can exit the smartphone. -Making Business.
Negotiations have been going on for months between the world’s largest telecom equipment manufacturer and a consortium led by Shanghai government-backed investment firms, with people declining to be identified as keeping the discussions secret.
According to a source, Huawei started exploring possibilities of selling the brands as early as September last year. Two sources for the evaluation put on brands by Huawei were not private.
According to consultancy IDC, shipment of Mate and P Series phones was worth $ 39.7 billion between Q3.799 and Q3 2020.
However, Huawei is yet to make a final decision on the sale and the talks may not end successfully according to two sources, as the company is still trying to manufacture its high-design Kirin chips at home that power its Is smartphones.
A spokesperson for Huawei said, “Huawei has learned that there are ongoing unrelated rumors about the potential sales of our major smartphone brands.” “These rumors have no merit. Huawei has no such plans. “
The Shanghai government said it was not aware of the situation and declined to comment further.
The duo said that with the potential sales of Huawei’s premium smartphone lines, the company has little hope that the new Biden administration will have a change of heart to supply chain restrictions imposed on Huawei by May 2019.
Shanghai government-backed investment firms could form a consortium with Huawei’s dealers to handle the P and Mate brands, a model similar to the Honor deal, according to another person. Huawei is also likely to have its existing P&Met management team for the new unit, two people said, if the deal happens.
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Huawei, the world’s largest telecommunications equipment vendor and No. 2 smartphone manufacturer, announced the sale of its budget phone brand Honor last November from a consortium of 30 dealers led by the Shenzhen government-backed company.
The second source stated that all-cash sales exceeded 100 billion yuan ($ 15.5 billion). Honor declined to comment.
Honor’s sales were intended to keep the budget brand alive, as restrictions placed on Huawei by the United States disrupted the unit’s supply chain, and the company’s major hardware such as chips and software such as Alphabet Inc.’s access to Google mobile services Was cut.
Huawei may have a similar objective in driving sales of mobile brands. Two sources said that Huawei’s latest plans for the two high-end brands were driven by inadequate chip supply.
Washington says that Huawei is a national security threat, which Huawei has repeatedly denied.
On Friday, Honor indicated that the goal of the spin-off was reached by announcing that it had formed partnerships with chip makers such as Intel and Qualcomm and launched a new phone.
Last year, Richard Yu, chief executive of the company’s Consumer Business Group, said US sanctions meant Huawei would soon stop manufacturing Kirin chips. Analysts expect chips to be depleted this year.
Huawei’s HiSilicon division relies on software sourced from US companies such as Cadence Design Systems Inc. or Synopsis Inc. to design its chips and it outsources production to Taiwan Semiconductor Manufacturing Company (TSMC), which equipment from American companies. uses it.
The P and Mate phone series are among the top players in the high-end smartphone market in China and compete with Apple’s iPhone, Xiaomi Corp’s Mi and Mix series, and Oppo’s Find series.
According to market research firm Counterpoint, the two brands contributed nearly 40% to Huawei’s total sales in the third quarter of 2020.
Analysts have already noted the recent insufficient supply of the major P40 and Mate40 series due to the lack of a critical component.
“We expect a steady decline in P and Mate series smartphone sales through Q1 2021,” said Flora Tang, an analyst at Counterpoint.
Julie Zhu, Yingxi Yang and David Kirton, additional reporting by Brenda Goh; Editing by Sumit Chatterjee and Sri Navaratnam