Huawei might have to sell its server division following US sanctions

Huawei is reportedly in advanced talks to sell off its server business after it faced difficulties securing processors from Intel following the US government blacklisting the company.

As reported by Bloomberg which spoke with people familiar with the matter, the Shenzen-based company is mulling the idea of selling off its x86 server business to a consortium of companies that includes at least one government-backed buyer.

Although the precise value of the deal is still unknown, it's likely worth billions of yuan with several potential buyers emerging from both the government and private sector in recent months. So far though, the state-owned firm Henan Information Industry Investment has emerged as the most likely buyer which makes sense given how it has been a partner of Huawei's server business.

At the moment, it is still unclear as to whether or not the company, consumer electronics maker Huaqin Technology and others are bidding separately or as part of a consortium. Last year, Huawei also sold off its Honor smartphone brand to a consortium led by the Shenzhen government.

US sanctions fallout

While Huawei was once a major player in the smartphone market and was gearing up to give Samsung and even Apple a run for their money, that all changed in 2018 when the Trump administration led a campaign against the company.

The former US president and others highlighted the national security risk that was posed by using Huawei's chips in the country's telecommunications networks. This also led to US companies such as Qualcomm being banned from supplying Huawei with a number of components including those used in 5G smartphones.

According to a statement from the company's rotating chairman Guo Ping, Huawei's enterprise business has stabilized in the years since while its consumer divisions have been “significantly impacted” by US sanctions which have yet to be lifted.

Although its server division isn't a core part of Huawei's offerings, it was used to develop servers for its cloud computing business using designs based on technology from Arm. 

We'll likely hear more regarding Huawei's server business once the company finds a buyer for it.

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Via Bloomberg

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