(Reuters) – Chinese Huawei Technologies Co. Ltd. is in early stages of talks to sell its premium smartphone brands P and Mate, two people with direct knowledge of the matter said, a step that could lead to the exit of the enterprise of the luxury smartphone. -undertaking.
The people said the talks between the world’s largest maker of telecommunications equipment and a consortium led by government – backed investment firms in Shanghai said they did not want to be identified as the talks were confidential.
According to one of the sources, Huawei already started the possibility of selling the brands in September. The two sources were not aware of the valuation Huawei placed on the brands.
According to QC 2020, shipments of Mate and P-series phones were worth 39.7 billion between Q3 2019 and Q3 2020.
However, according to the two sources, Huawei has not yet made a final decision on the sale, and according to the two sources, the talks may not be completed successfully, as the company is still trying to make its own, designed Kirin chips at home. manufactures what his smartphones.
“Huawei has learned that there are unfounded rumors circulating about the possible sale of our flagship smartphone brands,” a Huawei spokesman said. ‘These rumors have no merit. Huawei does not have such a plan. ‘
The Shanghai government said it was not aware of the situation and did not want to comment further.
The potential sale of Huawei’s premium smartphone lines indicates that the company has little hope that the new Biden administration will have a change of heart regarding the supply chain restrictions that have been placed on Huawei since May 2019, the two people said.
The Shanghai government-backed investment firms could form a consortium with Huawei’s dealers to take over the P and Mate brands, according to the second person, a model similar to the Honor agreement. The two people are also likely to retain its existing P & Mate management team for the new entity if the deal goes through.
VICTORY OF OUR CHURCHES
Huawei, the world’s largest telecommunications equipment provider and number 2 smartphone maker, announced last November that its budget phone brand Honor was being sold to a consortium of 30 retailers led by a company backed by the Shenzhen government.
The second source said that the cash sale reached more than 100 billion yuan ($ 15.5 billion). Honor declined to comment.
The Honor sale was aimed at keeping the budget brand alive, as the US sanctions imposed on Huawei hampered the unit’s supply chain and the company’s access to key hardware such as chips and software such as Alphabet’s Google Mobile Services Inc cut off.
Huawei may have a similar goal to pursue the sale of mobile brands. The two sources said that Huawei’s latest plans for the two high-end brands were motivated by insufficient chips.
Washington says Huawei is a national security threat, which Huawei has repeatedly denied.
Honor indicated on Friday that the goal of the thinning was achieved by announcing that it had entered into partnerships with chip manufacturers such as Intel and Qualcomm and launched a new phone.
Last year, Consumer Business Group CEO Richard Yu said U.S. restrictions meant Huawei would soon discontinue Kirin chips. Analysts expect the stock of chips to run out this year.
Huawei’s HiSilicon division relies on software from US companies such as Cadence Design Systems Inc or Synopsys Inc to design its chips and contracts the production to Taiwan Semiconductor Manufacturing Co. (TSMC), which uses equipment from US companies.
The P and Mate phone series are among the leading players in the higher-end smartphone market in China and compete with Apple’s iPhone, Xiaomi Corp’s Mi and Mix series and OPPO’s Find series.
According to market research firm Counterpoint, the two brands contributed nearly 40% to Huawei’s total sales during the third quarter of 2020.
Analysts have already taken note of the recent insufficient stock of the flagship P40 and Mate40 series due to a severe shortage of components.
“We expect a steady decline in sales of smartphones from the P and Mate range until the first quarter of 2021,” said Flora Tang, an analyst at Counterpoint.
Reporting by Julie Zhu, Yingzhi Yang and David Kirton, Additional Reporting by Brenda Goh; Edited by Sumeet Chatterjee & Shri Navaratnam