The U.S. government’s trade restrictions on Huawei seem to be dealing another major blow to the firm’s smartphone business. The Chinese phone maker is reportedly in talks to sell parts of its Honor unit to Digital China Group Co Ltd and other potential bidders.
Reuters reported today that the move is part of Huawei’s shift in priorities as it seeks to focus on its high-end smartphone business amid U.S. sanctions, which have been extended to 2021. It’s not entirely clear for now what assets will be divested, but the deal could amount to as much as 25 billion yuan (approximately $3.7 billion), although it could be ultimately smaller than that.
The report, which cites sources familiar with the discussions, further says the sale might cover Honor’s brand, research and development, and supply chain management businesses. In addition to Digital China, which distributes the Honor devices, Chinese electronics firm TCL and phone maker Xiaomi are among the potential buyers.
Huawei’s plight stems from the U.S. government’s suspicion that it could be used by China to spy on its citizens, posing a national security risk. However, the Chinese tech giant repeatedly denied allegations that it can be pressured by its government to share user data.