ZTE may sell its smartphone business in massive $5.6 billion deal, RedMagic to stay out of deal

ZTE is reportedly considering a major restructuring of its smartphone business through a new joint venture. The proposed arrangement could bring in an internet technology giant and Shanghai state-owned capital. Negotiations are said to have progressed significantly, although several financial and ownership details remain unsettled.

ZTE smartphone business joint venture reportedly in the works

According to a report citing people familiar with the discussions, ZTE plans to transfer its consumer smartphone operations into a jointly owned company involving ZTE, a major Chinese internet company, and Shanghai state-owned investors. The proposed business is valued at around 40 billion yuan (approximately $5.6 billion), while the internet company is reportedly prepared to contribute around 8 billion yuan (approximately $1.1 billion). The final valuation, equity distribution and transaction structure are still being negotiated.

Discussions reportedly began in April 2026 before gaining momentum again in July. Both sides are said to have settled on a broad cooperation model in September, with an announcement initially planned for late October. However, the disclosure has apparently been delayed. The proposed arrangement would cover ZTE’s consumer smartphone operations across domestic and international markets rather than represent an outright sale of the entire company.

What’s included in ZTE’s proposed smartphone business deal?

Notably, the proposed transfer will not cover every product handled by ZTE’s existing mobile division. Router products and home terminal devices are expected to return to the parent company’s operations, while the RedMagic gaming smartphone business will remain outside the transaction. This means the proposed joint venture would primarily focus on ZTE’s mainstream consumer smartphone operations, including its international business.

ZTE has reportedly already taken steps to prepare for the restructuring. In April 2025, it established Shanghai Shenqi Jiyuan Intelligent Terminal Co., Ltd., a wholly owned subsidiary, with Wang Xiyu as chairman and Ni Fei as a director. According to ZTE’s 2025 interim report, the company was established in April and remained fully owned by ZTE. Smartphone business employees have reportedly been transferred to this subsidiary, which could serve as the vehicle for the proposed joint venture.

The arrangement could give ZTE additional financial and strategic support for its consumer smartphone operations while allowing the parent company to concentrate on other businesses. However, neither the identity of the internet company nor the final ownership structure has been officially confirmed.

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