Huawei revealed in its annual report that it has fulfilled its contractual rights and obligations associated with the supplementary agreement for the sale of the Honor business. Huawei signed this supplementary agreement with Honor’s buyer in 2023.
In line with previous announcements, the report confirms that Huawei has sold off its Honor business and server business-related subsidiaries. Huawei’s 2023 Annual Report adds that the sale consideration is received in installments, but the final amount of the sale is uncertain.
The Annual Report revealed that the financial instruments related to sales were measured at fair value and not market price. Furthermore, cash receipts related to these financial instruments are presented within investing activities in the consolidated statement of cash flows. The report highlights that the fair value change of financial instruments formed by the disposal of subsidiaries and businesses in 2023 amounted to a significant sum of 55.853 billion yuan.
Background information provided in the report traces back to November 2020 when Shenzhen Zhixin New Information Technology Co., Ltd. completed the comprehensive acquisition of business assets related to the Honor brand. This acquisition, jointly invested in and established by Shenzhen Smart City Technology Development Group and more than 30 Honor agents and distributors, saw Huawei relinquishing its shares in the new Honor company.
Huawei sold off its Honor brand in 2020
Huawei sold its Honor smartphone business to a consortium comprising over 30 companies, including agents, dealers, Shenzhen government-backed entities, and e-commerce platform Sunning.com Group. Notable among the buyers is China Telling Telecom, a distributor for major smartphone brands like Huawei, Samsung, and Apple.
While selling the business, Huawei acknowledged the challenges faced by its budget brand Honor in maintaining access to crucial components amid the U.S. crackdown. By spinning off Honor into an independent entity, Huawei wanted to navigate restrictions imposed by the U.S. government on its global suppliers. This strategic move was intended to safeguard Honor’s operations independently and ensure that Honor would have access to vital supplies, amidst the sanctions and restrictions imposed by Washington.
