Huawei smartphone business posted the worst result since the US ban in Q4 2020. It is also the quarter that Huawei announced the separation of Honor brand.

The new Honor started running independently in January 2021 and launched V40. It is a big divestment decision for Huawei. The divestment will give hopes to Honor in 2021 and lift it from the US sanction on Huawei. Now the key challenge for the new Honor is the supply shortage of key components in 2021, and consequently less competitive product portfolio especially in the first half of the year. Another risk is the uncertainty around Google Mobile Service for overseas markets.

Huawei’s remaining smartphone business is facing huge uncertainties than the new Honor. The most-likely scenario from our perspective is that US ban on Huawei will continue and Huawei will run out of all cards and be forced to sell the whole smartphone business to a new consortium. This will help the new company bypass US ban and help Huawei to get rid of the liabilities to employees and to business partners and get some extra cash income. If the deal happens, it will be more complicated than the Honor deal and the future of Harmony OS and Huawei Mobile Services will remain a big question mark.

Our latest reports Q4 ’20: Downturn Maintains After Honor Split was just published. WSS clients can access the full report via this link.