Honor, the budget brand sold by Huawei in November last year, is reportedly working in cooperation with US chip giant Qualcomm, a move that will enable it to get access to 5G chips and embark on an ambitious journey to compete with domestic players including Xiaomi, Xiaomi and Vivo, analysts said.
The remarks came after the China Securities Journal, citing Honor's supplier, said that Huawei's 5G mobile phones using Qualcomm chips are already in the research and development (R&D) process.
Another report from domestic news site yicai.com said Honor's cooperation with Qualcomm is on the way. "Since Honor is not included on the US Entity List, its cooperation with US firms does not need approval (from the US)," said the yicai report, citing Honor insiders.
Honor said that it "was not aware of the matter" when asked by the Global Times about its cooperation of Qualcomm.
Qualcomm did not reply to an interview request from the Global Times as of press time on Wednesday, but the US chip giant has previously voiced a willingness to talk and cooperate with Honor, according to media reports.
"Honor may roll out 5G smartphones equipped with chips from Qualcomm or MediaTek in about two or three months," Xiang Ligang, director-general of the Beijing-based Information Consumption Alliance, told the Global Times on Wednesday.
Since its spinoff from Huawei, Honor has been boosting R&D for smartphones, Xiang said, noting that the brand's cooperation with chip suppliers — including Qualcomm and MediaTek Inc — will be strengthened for high-end chip supply.
Huawei officially announced the divestment of its budget smartphone sub-brand Honor in mid-November to ensure the brand's survival after the Trump administration cut off the Chinese tech giant's access to global technology suppliers.
Analysts said that in principle, Honor can get access to chips and other software from US companies as soon as the spinoff is done.
Honor announced on December 25 that it signed an agreement with Microsoft and will use Windows 10 as its official laptop operating system across the globe. This is also the first time that Honor, as an independent brand, reached a strategic cooperation agreement with a foreign company.
Nevertheless, TrendForce, a global provider of market intelligence on the technology industries, said that affected by the US sanctions against Huawei in September, Honor has not had time to purchase mobile phone components for the first half of 2021.
When Huawei was placed under US government sanctions, rival Chinese smartphone makers like Xiaomi, OPPO and Vivo expanded their purchase plans, leading to a shortage in the industry chain's production capacity. Honor won't be able to acquire sufficient components as it did in previous years, TrendForce said, and things won't get better until the second half of 2021.
After separating from Huawei, Honor won't be satisfied with only the low-end market, Xiang said, and it will likely enter the high-end mobile phone sector to compete with brands such as Xiaomi, OPPO and OnePlus.
Huawei founder Ren Zhengfei has said that he hoped Honor would become Huawei's strongest global competitor and even surpass it. Meanwhile, he urged Honor to embrace globalization, including enterprises from countries and regions like the UK, the US and South Korea. "Being a tech power, the US has many excellent companies. You should be courageous and cooperate with them," he said.
Honor had revenues of about 90 billion yuan ($13.95 billion) in 2019, with net profits of some 6 billion yuan. The Honor brand's revenue accounted for 15-17 percent of the total revenues of Huawei's consumer business group and about 8-9 percent of the company's total revenue.