China’s Huawei In Negotiations To Divest Its P And Mate Brands: Reuters

In a move that could eventually see the Chinese firm Huawei Technologies Co Ltd exiting the high-end smartphone-making business, the firm was reported to be in early stage talks to sell its premium smartphone brands P and Mate, claimed a report published by the news agency Reuters.  

The report claimed that the talks are being held between the largest telecommunications equipment maker of the world and a consortium led by Shanghai government-backed investment firms and the negotiations have been ongoing for months now.

According to one of the sources mentioned in the report, the possibility of divesting the brands was being investigated internally by the company as early as September last year. the report did not carry any value for a potential deal.

According to consultancy IDC, the value of the Mate and P Series phones that were shipped by Huawei between Q3 2019 and Q3 2020 was at $39.7 billion.

The report however also cautioned that the current talks might not actually translate into a deal and a final decision is yet to be taken by Huawei because the company is still trying to manufacture its in-house designed high-end Kirin chips in China which are used in its smartphones.

“Huawei has learned there are unsubstantiated rumours circulating regarding the possible sale of our flagship smartphone brands,” a Huawei spokesman said. “There is no merit to these rumours whatsoever. Huawei has no such plan.”

No comment on the issue was available from the Shanghai government in the Reuters report.

 According to analysts, this latest move by Huawei seems to suggest an assumption has been made by the company that the new United States administration under Joe Biden will not alter the sanctions that have been slapped against the company by the preceding Trump administration. The sanctions imposed by the US on Huawei in May 2019 essentially chocked the supply chain of he company which made it very hard for the company to manufacture smartphones.

According to sources quoted in the report, a consortium with Huawei’s dealers may be formed by the Shanghai government-backed investment firms in order to acquire the P and Mate brands which would be a model similar to that of the Honor deal. Sources said that if the deal goes through, the existing P& Mate management team would be retained by Huawei for the new entity.

The sale of its budget phone brand Honor to a consortium of 30 dealers led by a company backed by the Shenzhen government was announced last November by Huawei, the biggest telecoms equipment vendor and second largest smartphone maker of the world. According to reports, the all-cash deal generated more than 100 billion yuan ($15.5 billion) for the company which has not been confirmed by Huawei or Honor.

 The Honor deal was aimed to keep the budget phone model alive in the market as the brand’s supply chain had been severely hampered by the as sanctions slapped on Huawei by the United States resulting the company loosing access to some of the very critical hardware such as semiconductor chips and software such as Alphabet Inc’s Google Mobile Services.

(Adapted from Reuters.com)



Categories: Creativity, Geopolitics, Regulations & Legal, Strategy, Sustainability

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