Blacklisted by the US government, the Chinese ICT company Huawei's consumer business has been under great supply pressure since July 2020. The selling of the Honor mobile brand is intended to safeguard its survival.
On November 17, 2020, Huawei officially announced its intention to sell all of its Honor business assets to Shenzhen Zhixin New Information Technology Co., Ltd. Companies like Digital China (000034:SZ), TCL Technology (000100:SZ) and Xiaomi (01810:HK) were previously rumored to be buyers. All of these turned out to have failed in their bids.
The acquisition of Huawei's Honor brand involves Shenzhen Zhixin New Information Technology, which is jointly founded by Shenzhen Smart City Technology Development Group and over thirty agents and dealers of the Honor brand. Among the funding companies, Shenzhen Smart City Technology Development Group is a wholly state-owned Chinese company.
According to Huawei, once the deal is complete, the company will not hold any shares or be involved in any business management or decision-making activities in the new Honor company.
The separation of Honor from Huawei is beneficial for Honor's future development. With fewer restrictions from its SoC supply, Honor will deliver more high quality and better priced smartphone products with Qualcomm chipsets. Since its creation in 2013, the Honor brand has focused on the youth market by offering phones in the low- to mid-end price range.
During these past seven years, Honor has developed into a smartphone brand that ships over 70 million units annually and tops in many countries and regions around the globe, such as in Russia and Czech Republic. According to brand equity researcher BrandZ™, HONOR ranked 21st in the 'BrandZ Top 50 Chinese Global Brand Builders 2020' list and saw a 34% increase in its brand score compared to 2019.