Huawei Might Need To Sell Its Sub-Brand Honor To Survive US Sanctions

Karamchand Rameshwar - Oct 09, 2020

Due to the US ban, Huawei is facing difficulties in chip suppliers, and selling its sub-brand Honor might be the best solution.

Huawei is running out of chipsets used to make its devices. Ming-Chi Kuo, an analyst at TF International Securities, commented on what steps Huawei could take to deal with the ban.

Huawei Us Companies — Huawei is struggling with getting a stable chip supply after the US ban.

According to Kuo, in order to solve the shortage of chip supply, the Chinese giant might need to consider selling its sub-brand Honor. Selling this brand would be a win-win for both Honor, the chip suppliers, and China's electronics industry.

The separation from the Chinese giant would keep Honor unaffected by the US ban. And this will benefit Honor as well as temporarily relieve pressure on Huawei's chip supply.

Under Huawei's reign, Honor was considered only a low- and mid-segment phone brand. If separated, Honor can use its reputation and reach higher segments to increase brand value.

Honor 9x Pro Back — Honor mostly focuses on the budget and mid-range segments.

Ming-Chi Kuo believes that brand value is the current advantage of Honor. If it can keep its existing brand value after departing Huawei and expand its business to the mid-range and high-end segments, it will most likely retain its brand advantage and get more market share.

After being banned by the US, Xiaomi, Vivo, and OPPO’s market are expected to increase. However, if Huawei sells its Honor sub-brand, that won’t happen for brands focusing on the budget segment like Xiaomi and Realme. Vivo and OPPO’s market share could also be lower than expected if Honor can retain its brand recognition by users in China after it parts away with Huawei.