Huawei reportedly thinking of flogging its Honor smartphone business

Embattled Chinese vendor Huawei is apparently having to consider drastic measures thanks to US restrictions on its supply chain.

The news comes courtesy of Reuters, citing those shadowy people who reckon they know a thing or two about the matter. Huawei is apparently in talk to flog unspecified parts of its Honor smartphone business to its main distributor, as well as some other Chinese companies. Honor is the direct-to-consumer lower-priced Huawei smartphone brand, apparently created to mimic the Xiaomi model.

Huawei is having trouble procuring the chips needed to run smartphones because the US has banned the use of any of its technology in the production of anything Huawei might need. Not only does this mean Huawei can buy chips from Qualcomm, it also means chip fabs that use US technology, which is all of them, can’t supply Huawei if they don’t want to be put on the US naughty step.

It makes sense, therefore, that Huawei would be considering options for an orderly exit from the smartphone business. As it’s distinct from the rest of Huawei’s smartphone activities, Honor would appear to be the low-hanging fruit in that respect. So far the US hasn’t tried to victimise the likes of Xiaomi and Oppo in the same way it has Huawei, so presumably Honor would be allowed to score chips under new ownership.

Reuters claims an exclusive, but this rumour has been doing the rounds for a few days. It could be a controlled leak by Huawei to use as a trial balloon in order to gauge public (especially US political) attitudes to such a proposition. Similarly, the potential buyers will want to be sure they’re buying a viable operation that will be relatively free from US sabotage.

Apparently, Huawei wants to focus on its higher-end phones, but it’s not clear how it will be able to do that without any chips. It faces a similar challenge on the networking side, according to a report by Nikkei, which claims nearly 30% of the components in a Huawei 5G base station unit, including the FPGA, come from US suppliers. Unless Huawei can find a Chinese source for its phone and networking chips, it’s not clear how it can stay in business.