Top Apple analyst sees Huawei making a big divestiture
Honor uses online sales to distribute its handsets and it has generated over $10 billion in sales over the last five years. IDC and Strategy Analytics say that Honor has accounted for 28% and 38% of Huawei’s first-half shipments this year, respectively. Fitch Solutions analyst Kenny Liew says that “Honor is a very well-established brand in the low-to mid-range segment, and has been key for Huawei to make inroads into many developing markets around the world. At the same time, Honor continues to rely heavily on Huawei’s distribution channels, expertise in chip design and manufacturing capabilities to produce and sell its products.” Liew does not expect to see Huawei sell-off Honor.
If the current Trump administration is voted out of office next month, a new administration would take over in January and could reverse the restrictions. However, until such changes are made, Huawei still has to abide by the current rules that do threaten its survival after the current year. In the U.S., Huawei is considered a national security threat due to its perceived ties with the Communist Chinese government.
Huawei is not expected to benefit greatly from divestiture of Honor as the latter would experience most of the upside. There is concern that the U.S.-China trade war could impact Honor even if the company becomes independent. Bryan Ma, vice-president of client devices research at IDC said that “Even if Honor becomes a separate business, that doesn‘t guarantee that it won’t get caught up in the trade war later.” And not all analysts think that Honor is an up and coming brand. Linda Sui, director of smartphone research at Strategy Analytics, says that no other Chinese company would buy it. “It’s a hot potato,” she said. “It will create big trouble for whoever takes it over.”