Huawei in early stage talks to sell P and M brands

According to two sources familiar with direct knowledge of the matter at hand, Huawei Technologies Co Ltd is in early-stage talks to sell its premium smartphone brands P and Mate, in a move that could potentially see the Chinese company exit from the high-end smartphone-making business.

Negotiations between Huawei and a consortium led by Shanghai government-backed investment firms have been ongoing since months, said sources on the condition of anonymity since the discussions were confidential.

Huawei has started to internally explore the possibility of selling the brands as early as last September, said one of the sources. Both sources were not privy to the valuation placed on the brands by Huawei.

According to consultancy IDC, shipments of Huawei’s Mate and P Series phones were worth $39.7 billion between Q3 2019 and Q3 2020.

Huawei has yet to make a final decision on the sale and the talks might not conclude successfully, cautioned sources with the company still trying to make its in-house designed high-end Kirin chips which power its smartphones.

“Huawei has learned there are unsubstantiated rumours circulating regarding the possible sale of our flagship smartphone brands,” said Huawei’s spokesman. “There is no merit to these rumours whatsoever. Huawei has no such plan.”

According to two sources, Huawei’s move suggests it has little hope that the Biden Administration will have a change of heart towards the supply chain restrictions placed on Huawei since May 2019.

If the deal goes through, Huawei is also likely to retain its existing P & Mate management team for the new entity.

Both brands contributed around 40% to Huawei’s total sales over the third quarter of 2020, according to Counterpoint, a market research firm.

 “We expect a continuous decline in sales of P and Mate series smartphones through Q1 2021,” said Flora Tang, an analyst at Counterpoint.

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