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| Due to US sanctions Huawei intends to sell its server unit |
According to Bloomberg News, Huawei is in extensive negotiations to sell its x86 server business after the company was blacklisted by the United States and struggled to obtain processors from Intel. This is the latest blow to the Chinese tech giant. through US sanctions.
The Shenzhen-based company has sold its server business to a consortium that includes at least one government-sponsored buyer. The exact value of this transaction is not yet known. But probably in the billions.
Several potential buyers from the public and private sectors have emerged in the past few months. Henan Information Industry Investment, a state-owned company headquartered in Zhengzhou, has always been a partner and potential buyer of Huawei's server business.
Hixih Technology, a consumer electronics manufacturer, and an asset management company representing the Hubei provincial government are participating in the negotiations. It is not clear whether these companies are bidding individually or as part of the same consortium.
Huawei was once a dominant national hero in mobile phones and communication devices. Since the Trump administration launched extensive measures against Huawei in 2018, Huawei has had to adjust its business activities.
After the US banned Qualcomm and other US companies from supplying Huawei with certain components, including 5G chips, a year ago, the company sold its Honor smartphone brand to a government-run consortium from Shenzhen for an undisclosed amount.
Huawei threatens more setbacks due to sanctions
Export restrictions cause economic losses. The company said its revenue fell 38% to 135 billion yuan ($21.2 billion) in the third quarter, the fourth consecutive quarter of declines in revenue.
The company's business is stable, while the consumer sector has been hit hard, the rotating chairman said in a statement.
The x86 server line is not a core business of the company. Huawei has developed its own cloud computing server, which is powered by ARM processors with Huawei Kunpeng technology.
The company has established strong business relationships with companies supported by the Henan provincial government. Huanghe Kunpeng, a subsidiary of Henan Information Industry Investment, uses Huawei Kunpeng processors to develop servers and computers.
Huawei recently set up a subsidiary called Xfusion in the provincial capital of Zhengzhou to develop business related to Kunpeng technology.
Separating the x86 business may give it more opportunities to grow. Honor Smartphone Group said the one-on-one offer with Huawei enabled it to resume trade relations with major suppliers because the company is not subject to export restrictions.