Huawei sells the Honor brand to a consortium of agents and resellers to keep the unit alive

Huawei Technologies Co Ltd is selling its budget-branded Honor smartphone unit to a consortium of more than 30 agents and resellers in a bid to keep it alive, the company and consortium said on Tuesday.

The deal comes after US restrictions on supplying Huawei Technologies on the grounds that the company poses a threat to national security – which it denies.

The consortium released a statement on Tuesday announcing the purchase, which will be made through a new company, Shenzhen Zhixin New Information Technology.

Huawei will not hold any shares in the new Honor company after the sale, the statement said.

In Huawei’s statement, the company said its consumer business is under “tremendous pressure” due to “continued unavailability of technical elements” for its telephony business.

This decision was made by Honor’s industry chain to ensure its own survival, Huawei said.

The change in ownership will not affect Honor’s development direction, according to the two statements.

No figures for the deal were given.

Sources knowledgeable in the matter claim that US government restrictions have forced the world’s second-largest smartphone maker – after South Korean company Samsung Electronics Co Ltd <005930.KS> – to focus on top phones. range and businesses. A source said on Tuesday that the US government would have no reason to impose sanctions on Honor after its separation from Huawei.

Honor sells smartphones through its own websites and third-party retailers in China, where it competes with Xiaomi Corp <1810.HK>, Oppo, and Vivo in the low-cost handset market. It also sells phones in Southeast Asia and Europe, and ships 70 million units a year, according to the Huawei statement.

Among the buyers is Suning.com electronics and home appliance store <002024.SZ>, including several public investment companies in Huawei’s hometown of Shenzhen.

Honor will seek more investment partners in the future, with the possibility of a possible listing, the source said.

Reuters reported earlier this month that Huawei was in talks to sell Honor in a 100 billion yuan ( 11 billion) deal to a consortium led by handset distributor Digital China and the government. from Shenzhen.

The source said Digital China was not among the final buying group.

Huawei has said its line of high-end smartphones was threatened by US sanctions, with its consumer business manager saying in August that it would not be able to continue making the Kirin chips that power its top models. range.