Huawei’s exit from premium smartphone market would be ‘a last resort’ amid US sanctions, analysts say
- Speculation swirled on Monday about Huawei potentially selling its high-end smartphone brands to a Shanghai government-backed consortium
- The company said it remains ‘fully committed’ to its smartphone business, vowing to ‘deliver world-leading products’
In response, Shenzhen-based Huawei said in a statement on Monday: “There is no merit to these rumours whatsoever ... We remain fully committed to our smartphone business, and will continue to deliver world-leading products and experiences for consumers around the world.”
“Selling another good-performing business unit will not solve issues from the US trade ban and only cause Huawei to lose a major revenue source,” said Will Wong, a Singapore-based analyst at tech research firm IDC. “That kind of deal could only be used by Huawei as a last resort, especially when the company still wants to sustain a presence in the [smartphone] market.”
Huawei expected to drop to seventh globally in smartphone production amid US sanctions
“The current US sanctions are not extended to the new Honor, so that is likely to be the same case for other consumer businesses under Huawei if they also become independent,”said Flora Tang, a Hong Kong-based analyst at Counterpoint Research.
With tensions still high between Washington and Beijing, the major Chinese technology companies are not expected to be treated differently by the new US administration under President Joe Biden, according to Tang of Counterpoint.
“Huawei has the choice to sell its premium smartphone business, or even the entire consumer business group, if the company remains pessimistic about its development outlook under the current global geopolitical context,” she said.
Apple supplier Murata expects half-billion 5G smartphones in new year, as brands rush to replace Huawei
“While relinquishing control or spinning off a brand may avoid sanctions in the short term, if the US wishes to extend those sanctions then it can do so easily,” said Paul Haswell, a partner who advises technology companies at international law firm Pinsent Masons. “So we should not see the Honor story as a prediction of Huawei’s actions or the actions of other Chinese tech firms.”