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Huawei’s broken arm survives glory industry chain self-help

by YCPress

Huawei issued a statement on the 17th confirming the sale of its glory, and will no longer hold shares of glory after the transaction is completed. Analysts believe that this is a choice that Huawei has to make, and it is also a self-help for Huawei and Honor.

Affected by the “cut supply” of chips, Huawei’s mobile phone market share declined in the third quarter. According to data released by market research company Canalys recently, Huawei shipped 51.7 million mobile phones in the third quarter of 2020. In the third quarter of 2019, it was 66.8 million units, a year-on-year decrease of 23%. The market share dropped from 19% to 14.9%.

When Huawei’s consumer business CEO Yu Chengdong said at the end of October when Huawei released the Mate40 series of mobile phones, the Mate40 had already exceeded the supply capacity.

The pace of Honor’s mobile phone business has also slowed down, and some product plans have been temporarily shelved. As a community of interests, employees, supply chains, and distributors are under increased pressure.

Zhong Xinlong, a researcher at the Institute of Information and Software Research of CCID Think Tank, told a reporter from China News Agency that in the case of limited chip supply, Huawei can only take the form of breaking its arms to save itself and package and sell part of its business.

In the future, even if Huawei can obtain some Qualcomm or MediaTek chips, the number will be limited. The United States will not allow Huawei to become the world’s second largest mobile phone manufacturer.

He introduced that, generally speaking, large companies will consider splitting this approach when facing severe crises. In the past history of the United States, many companies were forced to split due to antitrust. Huawei’s split this time is the right choice and a choice that has to be made.

More than 30 companies that acquired Glory stated that “this acquisition is a self-help and market-oriented investment initiated by the Glory-related industry chain”, which can maximize the protection of the interests of consumers, channels, suppliers, partners and employees.

According to the acquisition agreement, Shenzhen Zhixin New Information Technology Co., Ltd. will complete the acquisition of Honor. The company was established on September 27, 2020. It was jointly invested and established by Shenzhen Smart City Technology Development Group and more than 30 Honor agents and distributors.

Shenzhen Smart City Technology Development Group is wholly-owned by the Shenzhen State-owned Assets Supervision and Administration Commission and holds 98.6% of Shenzhen Zhixin New Information Technology Co., Ltd. shares.

Established in 2013, Glory is a mobile phone brand that targets young people and is positioned at the low-end price range. It currently ships 70 million mobile phones annually.

In addition to mobile phones, Honor has diversified its layout around mobile phones, creating eight major entrances for tablets, TVs, speakers, glasses, watches, cars, headphones and PCs. In the era of the Internet of Everything, wearable devices, smart homes, smart devices, etc. will all be glory’s power and growth points.

Independent telecommunications analyst Fu Liang believes that Honor’s senior management and team will remain stable. Dealers and agents who invest in New Honor will only enjoy financial returns on investment in the future and will not participate in decision-making. This is to give confidence to the outside world.

Industry insiders believe that the development prospects of Honor after its independence depends on whether it can solve the problem of supply chain stuck neck. If overseas chips can be purchased smoothly, Honor’s independence will be a brand new start.

A number of industry observers interviewed believe that after Honor and Huawei are separated, if they cannot successfully purchase foreign chips, they will still face severe supply chain problems.