Huawei sells Honor funds telephone unit to authorities and distributors

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After weeks of rumors, Huawei confirmed that it is selling its budget phone unit Honor to a consortium of companies, including Honor's government-backed companies and distributors, according to a joint statement published Tuesday morning in a local Shenzhen newspaper .

"This acquisition is a market-driven investment to save Honor's supply chain. It is the best solution to protect the interests of Honor's consumers, distribution channels, suppliers, partners and employees," said the statement signed by the 40 companies.

Huawei lost key chip and software suppliers after the US government imposed trade sanctions on the telecommunications equipment and smartphone giant. A spin-out could theoretically free Honor from the supply chain restrictions that have hit Huawei hard.

In the meantime, no one in the consortium poses an existential threat to Huawei's market position. That leaves enough leeway for Huawei if it ever wants to buy back Honor from the group of state-sponsored companies and telephone dealers and agents.

The announcement didn't put a price tag on the purchase, despite Reuters previously reporting that it could cost 100 billion yuan ($ 15 billion).

This is an updated story.