Huawei could exit the high-end smartphone market as it mulls on selling its Mate and P series of smartphones

Things have gotten progressively worse for Huawei ever since the company found itself on the U.S. government's entity list. The world's largest telecommunication equipment manufacturer is convinced that it'll be on that list for a while and that the Biden administration is unlikely to reverse the decision. Therefore, Huawei has allegedly decided to take some drastic action to keep itself afloat. On the condition of anonymity, two people familiar with the matter have told Reuters that Huawei is planning on selling its Huawei P and Huawei Mate line of smartphones to a group of investors associated with the Shanghai government.

A Huawei spokesperson has vehemently denied the speculation. However, the deal could already be in the works, as Huawei refused to acknowledge that it was selling its sub-brand Honor until the very last moment. The Reuters report adds that the deal has a possibility of the deal not going through even though it has been in the works since September 2020.

While this deal could benefit Huawei financially in the short run, it will leave the company bereft of its two most prized possessions. The Huawei P and Huawei Mate line of smartphones generated nearly US$39.9 billion in sales for Huawei between Q3 2019 and Q3 2020. Furthermore, Huawei's flagship smartphones have always pushed the envelope for smartphone camera technology, and it is unlikely that the new management will be able to continue Huawei's legacy.

At the very least, users will still be able to buy Huawei P and Huawei Mate smartphones, something that seems doubtful at the moment, given Huawei's inability to manufacture and source critical components from the open market. Its dwindling stock of Kirin 9000 chipsets is bound to run out at some point. To make matters worse, it cannot source hardware from Mediatek, Qualcomm and even SMIC.

It is far too early to speculate the long-term repercussions of such an arrangement. We should be able to learn a thing or two from Honor, which also underwent a complete change in upper management. Things are looking better for Honor, as it plans on launching smartphones with Google Mobiles Services (GMS) this spring. Huawei's P and Mate line of smartphones could go down that path too, should the deal be finalized.