The deal comes after US government sanctions imposed restrictions on supplies for the Chinese company on the grounds that the company posed a threat to national security – which it denies.
The union issued a statement today, Tuesday, announcing the purchase, which is made through a new company called Shenzhen Zhixin New Information Technology, and the statement said: Huawei will not own any shares in the new Honor company after the sale.
Huawei said in a statement: Our consumer business has been under tremendous pressure due to the lack of technical elements necessary for the phone business, and this step has been taken by the Honor industry chain to ensure the survival of the brand, and that the change of ownership will not affect the direction of Honor’s development.
Sources familiar with the matter say: The restrictions imposed by the US government have forced the second smartphone maker in the world – after South Korea’s Samsung – to focus on advanced phones and business-oriented businesses.
And one of the sources said today, Tuesday: The US government will have no reason to impose sanctions on Honor after its separation from Huawei.
Honor sells smartphones through websites and external retailers in China, where it competes with Xiaomi, Oppo and Vivo in the low-priced phone market.
It also sells phones in Southeast Asia and Europe, and ships 70 million units annually, according to a Huawei statement.
Honor is looking for more investment partners in the future.
Reuters reported earlier this month that Huawei was in talks to sell Honor in a deal worth 100 billion yuan ($ 15.2 billion) to a consortium led by mobile phone distributor Digital China.
The source said: Digital China was not part of the final group of buyers.
Honor products often rely heavily on Huawei’s technology, so the company has been hit by US sanctions that prevent Huawei from doing business with US companies.
Under the new ownership, Honor should have more flexibility to develop its products, and it will likely be able to do business with the likes of Qualcomm and Google.