Sell the Business or Join Force with Mobile Network Operators? HUAWEI's Fate is Yet to be Determined

In mid-October, Reuters reported that Huawei is negotiating the sale of the Honor brand. This was denied at the time but eventually proved correct. Now Reuters is saying that Huawei is negotiating the sale of the flagship P and Mate series.

In response, Huawei officials quickly issued a statement to Chinese media that the company has no plans to sell its mobile phone business and that it will continue building high-end phones.

Apparently, Huawei is still looking to retain its cell phone business and is waiting for a change to happen, except that sustaining this huge business chain will be extremely costly.

Plans to keep or dispose of the remaining Huawei brands have existed for a long time. Selling the brand seems to be In the next 3 months, Huawei decision-makers will need to make a decision.

The first choice is to sell Mate, P, and Nova to the Shanghai state-owned system, just like Honor. But it is now seen as not the best because cell phones are at the core of the future intelligent terminals, it is really difficult for Huawei to completely cut it off.

The second choice, a more likely scenario, is that Huawei will open its brand to mobile network operators such as China Mobile and China Telecom, and even other hardware and industry chain manufacturers. Huawei, operators, and other companies, jointly operate and maintain the presence of the Huawei brand, so as to "fight again when it comes", as what the Chinese say.

Cooperate with Operators

This is not something new for Huawei.

In the 3G era, Huawei and ZTE relied on operators to make the first bucket of gold in the cell phone market, but Huawei later grew into the industry's leading high-end brand, while ZTE has never gotten rid of the label of a sticker phone brand.

But this time the cooperation will be fundamentally different from the past. Operators and other partners will be responsible for the brand operation of the Mate and P series, while Huawei will provide the design, R&D, and supply chain management organization of the phones, as well as managing the foundry production.

The advantage of this is that the brand names Mate and P will be able to break the supply chain blockade through the operators, and Huawei will be able to continue its R&D work as a "smartphone solution provider", preserving the fire for the cell phone business and an option for its own comeback.

Questions regarding HiSilicon

But what about HiSilicon, HUAWEI's IC designer company that delivered HUAWEI its Kirin chips?

When the pressure from the United States suddenly came, Ren Zhengfei, Xu Zhijun has stated on various occasions that they will continue to support the development of HiSilicon. But for how much longer?

Rumor has it that Huawei is seeking independent chip manufacturing as a way to continue and sustain the survival of HiSilicon Kirin. But it is destined to be a long process.

Previously, the industry has always been suspecting that Huawei would sell HiSilicon to the state capital, just like Honor.

And now another rumor is on the rise - HiSilicon Kirin is going to separate from HUAWEI, along with one of the top-level leaders from HUAWEI.

Heading into Automobile?

With a large sum of money in hand and the cell phone business hampered, it's time for Huawei to reconsider the automotive strategy.

In 2019, Huawei launched its HiCar solution and entered into a partnership with Geely Automobile to cut into the new car market. Subsequently, Huawei released its first in-car smart screen, which is reportedly equipped with Huawei's Hongmeng operating system, which enables seamless interconnection with cell phones and the car.

HiCar and the smart screen cut into both the new car market and the aftermarket, respectively, but at this time Huawei seems to have no interest in the car market. In 2019, in a document on organizational changes, Huawei approved the establishment of the Intelligent Vehicle Solutions BU, which states that "Huawei does not build cars, (we only) focus on ICT technology, (we will) become a supplier of additional ICT components for cars, and help companies build good cars".

The market for connected cars is huge, but there has yet to be a really good car for HUAWEI.

On November 4 last year, Changan Automobile announced that it would join Huawei and CATL to create a new high-end intelligent car brand. Then, a number of media broke the news that Huawei had applied for a number of patents for drivetrains in 2020.

These are obviously not the "ICT-focused technologies" mentioned by Huawei.

Public information shows that Huawei's CBG division is being integrated with the Intelligent Vehicle Solutions BU, and the integrated Intelligent Vehicle Solutions BU will be subordinated to the Consumer BG Management Committee. Huawei sources revealed that this so-called allocation does not mean the beginning of the "Huawei Automotive" brand.

Not long ago, in an EMT document of Huawei in 2020, Ren Zhengfei made a rare statement that "whoever suggests building a car in the future, interfering with the company, can be transferred out of the post and seek another position." The bottom of this document is also marked with a line of small print "this article is valid for three years from the date of issue".

Three years is going to be enough for Yu Chengdong to build up the entire electric supply chain.

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