Unique: China’s Huawei in talks to promote premium smartphone manufacturers P and Mate
© Reuters. FILE PHOTO: FILE PHOTO: The Huawei logo is featured on the main building in Reading
By Julie Zhu, Yingzhi Yang, and David Kirton
(Reuters) – China’s Huawei Technologies Co Ltd is in the early stages of talks to sell its premium smartphone brands, P and Mate, two people with direct knowledge of the matter. This could lead the company to eventually step back from high-end smartphone business.
Talks between the world’s largest manufacturer of telecommunications equipment and a consortium led by investment firms backed by the Shanghai government have been going on for months and have refused to be identified as the discussions were confidential.
According to one of the sources, Huawei started looking into the possibility of selling the brands internally back in September. The two sources were unfamiliar with Huawei’s assessment of the brands.
Mate and P-series phone shipments between Q3 2019 and Q3 2020 were $ 39.7 billion, according to consulting firm IDC.
Huawei has yet to make a final decision on the sale, however, and talks may not be successful as the company is still trying to get its self-designed high-end Kirin chips that power its power, according to the two sources Home manufacture smartphones.
“Huawei has learned that there are unsubstantiated rumors about the possible sale of our flagship smartphone brands,” said a Huawei spokesman. “These rumors have no value at all. Huawei has no such plan.”
The Shanghai government said it was unaware of the situation and declined to comment further.
The potential sale of Huawei’s premium smartphone lines suggests that the company has little hope that the new Biden administration will change its mind on the supply chain restrictions that have been in place on Huawei since May 2019, the two said.
The Shanghai government-backed investment firms could form a consortium with Huawei dealers to acquire the P and Mate brands, the second person said, a similar model to the Honor deal. Huawei will also likely keep its existing P&Mate management team for the new company if the deal goes through, the two people said.
OVERCOMING US CURBS
Huawei, the world’s largest telecommunications equipment provider and number two smartphone maker, announced last November the sale of its budget-friendly Honor phone brand to a consortium of 30 retailers led by a Shenzhen government-backed company.
The second source said the cash sale raised 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 U.S. sanctions against Huawei hampered the device’s supply chain and blocked the company’s access to critical hardware like chips and software like Alphabet’s (NASDAQ 🙂 Inc.’s Google Mobile had services.
Huawei may have a similar goal in tracking sales of the cellular brands. The two sources said Huawei’s recent plans for the two high-end brands were motivated by inadequate chip supplies.
According to Washington, Huawei is a national security threat that Huawei has repeatedly denied.
On Friday, Honor announced that the demerger’s goal had been achieved by announcing partnerships with chip makers such as Intel (NASDAQ 🙂 and Qualcomm (NASDAQ 🙂 and bringing a new phone to market.
Last year, Richard Yu, chief executive of the company’s Consumer Business Group, said the U.S. restrictions would mean Huawei would soon stop making Kirin chips. Analysts assume that the supply of chips will be used up this year.
Huawei’s HiSilicon division relies on software from US companies such as Cadence Design (NASDAQ 🙂 Systems Inc or Synopsys (NASDAQ 🙂 Inc) to develop its chips and is outsourcing production to Taiwan Semiconductor Manufacturing Co (TSMC), the devices used by US companies.
The P and Mate phone series are among the top players in the Chinese market for high-end smartphones and compete with the iPhone from Apple (NASDAQ :), the Mi & Mix series from Xiaomi (OTC 🙂 Corp and the Find series from OPPO.
According to market research firm Counterpoint, the two brands contributed nearly 40% of Huawei’s total sales in the third quarter of 2020.
Analysts have already determined that the flagship P40 and Mate40 series have not been adequately shipped recently due to a serious component shortage.
“We expect sales of P and Mate series smartphones to decline steadily through the first quarter of 2021,” said Flora Tang, an analyst at Counterpoint.