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US-China tech war: moment of truth looms for ex-Huawei unit Honor in new smartphone launch

  • Honor, the former budget smartphone brand of Huawei, is set to introduce its new V40 series 5G device as an independent company
  • The launch comes a few months after Huawei sold Honor to a Shenzhen-based consortium

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The V40 series 5G smartphone is Honor’s first new product as an independent company. Photo: Handout
Celia ChenandBien Perez
Huawei Technologies Co’s former budget smartphone brand, Honor, will unveil its first new device as an independent company on Friday, serving as an example of how domestic enterprises tied to firms blacklisted by Washington can survive the US-China tech war.
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Huawei sold all of Honor’s assets in November to Shenzhen Zhixin New Information Technology, a consortium of more than 30 agents and dealers of the budget smartphone vendor. The divestment was made to ensure that Honor’s business would continue, according to Huawei, after the US government imposed tighter trade restrictions on the telecommunications equipment giant in August last year.
Honor, which was previously part of the Huawei consumer business group’s dual-brand strategy, will launch its new V40 flagship 5G smartphone on Friday, the company announced on its website. Honor plans to produce 100 million smartphones this year, an increase of 40 per cent from its 2020 output, according to a report by Nikkei Asia, citing unidentified sources.

“Huawei’s decision to divest [Honor] was very prudent, allowing it to salvage the market momentum, scale and all the investments it has made over the years,” said Neil Shah, vice-president at Counterpoint Research. “In future, Huawei could reacquire its stake in Honor if the brand continues to do well and if US sanctions are alleviated under the new Biden administration.”

The new product launch by an independent Honor smartphone business would show there are available avenues to get around stifling US trade restrictions, which have blocked Huawei’s access to Google software and services, and chips made with American software and technology, even from companies outside the US.

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“According to our industrial checks, the current trade restrictions on Huawei are not extended to the new Honor, so the company will be able to work with [US hi-tech suppliers like] Google and Qualcomm,” said Flora Tang, a Hong Kong-based analyst at Counterpoint Research. “For Honor, this is an opportunity to survive in the global consumer electronics industry.”
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