Huawei sells smartphone brand HONOR due to 'tremendous pressure'

Technology company Huawei is selling its smartphone brand HONOR to Shenzhen Zhixin New Information Technology. This comes as the company's said it has been under "tremendous pressure" as of late, due to a persistent unavailability of technical elements needed for its mobile phone business. According to a press statement, the sale will help HONOR's channel sellers and suppliers "make it through this difficult time".

Huawei also confirmed in the statement that once the sale is complete, it will not hold any shares or be involved in any business management or decision-making activities in the new HONOR company. This move was been made by HONOR's industry chain to ensure its own survival, with over 30 agents and dealers of the HONOR brand first proposing this acquisition.

Founded in 2013, the HONOR brand focuses on the youth market by offering phones in the low- to mid-end price range. According to its official website, HONOR's purpose is to invent an intelligent new world for a Generation Z audience that is connected, innovative, and open-minded. Besides smartphones, HONOR also launched a series of wearable smartwatches. 

Since then, HONOR has developed into a smartphone brand that ships over 70 million units annually, according to Huawei's press statement. It is added that Huawei highly appreciates the continued dedication, attention, and support given by HONOR's consumers, channel sellers, suppliers, partners, and employees.

"We hope this new HONOR company will embark on a new road of HONOR with its shareholders, partners, and employees. We look forward to seeing HONOR continue to create value for consumers and build a new intelligent world for young people," a spokesperson added. 

Huawei has hinted at its struggle with its global supply chain in its recent financial statement. The company had said that its supply chain is being put under "intense pressure" and its production and operations face "significant challenges". The company was also said to be finding solutions, to survive and forge forward and fulfill its obligations to customers and suppliers. However, the brand is not doing too bad in terms of revenue. For the first three quarters of 2020, Huawei generated approximately US$101.9 billion in revenue, which is an increase of 9.9% over the same period last year. The company's net profit margin in this period was reported to be 8% as well. According to the company, its business results basically met expectations.

Moving forward, Huawei also said it will leverage its strengths in information and communications technologies (ICT) such as artificial intelligence (AI), cloud, 5G, and computing to provide scenario-based solutions, and develop industry applications. Its stated goal in the financial statement is to help enterprises grow their business and help governments boost domestic industry, benefit constituents, and improve overall governance.

This comes as Huawei recognises ICT as the main driver behind sustainable social, economic, and environmental development. It also believes that rapid and healthy development within the ICT industry will rely on open collaboration and mutual trust across the global industry, so it will continue working closely with its global partners and using its innovative ICT technologies to create greater value for customers despite the complex situation it is currently facing. 

In May 2019, Huawei faced trade restrictions as the US government banned its companies from working with the China-based technology company, citing national security issues. This ban caused companies such as Google to stop working with Huawei and withdrawing its apps for its future models, including Gmail, Maps, YouTube, and the Play Store. Similarly, Facebook suspended providing software to Huawei for pre-installs of Facebook apps on its new devices, including Facebook, Instagram, and WhatsApp. Earlier this year, the ban was extended for another year, taking effect until May 2021.

However, it is not all doom and gloom for Huawei. Last week, Qualcomm received a license from the US government to sell 4G mobile phone chips to Huawei, making it the only exemption to the restrictions imposed. According to Reuters, a spokesperson from Qualcomm said it has been granted license to sell a number of products that are related to mobile devices.   

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(Photo courtesy: 123RF)

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