Huawei Technologies Co Ltd is in talks with Digital China Group Co Ltd and other suitors to sell parts of its Honor smartphone unit in a deal that could fetch up to 25 billion yuan ($3.7 billion), people with knowledge of the matter said.

Embattled Huawei is resetting its priorities in the face of U.S. sanctions and will focus on its higher-end Huawei phones rather than the Honor brand which is aimed at young people and the budget conscious, they said.

The assets to be sold have yet to be finalised but could include Honor’s brand, research & development capabilities and related supply chain management business, two of the people said.

The deal may be an all-cash sale and could end up smaller, worth somewhere between 15 billion yuan and 25 billion yuan, one of the people said.

Digital China, the main distributor for Honor phones, has emerged as the frontrunner but other prospective buyers include Chinese electronics maker TCL and rival smartphone maker Xiaomi Corp, the people said.

The sources declined to be identified as the talks were confidential.

Huawei, Digital China and Xiaomi did not immediately respond to requests for comment. TCL declined to comment. ($1 = 6.7389 Chinese yuan) (Reporting by Julie Zhu in Hong Kong; Additional reporting by David Kirton in Shenzhen; Editing by Sumeet Chatterjee and Edwina Gibbs)

By: DocMemory
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