Huawei will sell the server division because it is on the US blacklist

Chinese telecommunications giant Huawei Technologies has made progress in negotiations to sell its x86 server division to an unspecified consortium. The reason for the sale is the inclusion of Huawei on the black list in the USA, which made it difficult for the company to buy processors from the American company Intel. Bloomberg News reported on Tuesday, referring to sources familiar with the matter. The exact value of the transaction could not be determined, but it will probably be billions of yuan, they said. In recent months, several potential buyers from the government and private sectors have emerged. Henan Information Industry Investment, a Zhengzhou-based state-owned company that is a partner in Huawei's server business, is a hot candidate, one source said. Consumer electronics maker Huaqin Technology and an asset management company representing the Hubei Province government also took part in the talks. It is not clear whether these companies apply for the server division alone or as part of the same consortium. Huawei declined to comment on the news. Potential buyers did not respond to comments. Huawei, once the champion with dominant positions in mobile phones and communications equipment, had to rethink its operations after the former administration of former President Donald Trump launched a large-scale campaign against the Chinese company in 2018. Huawei sold its Honor smartphone brand to a government-led consortium a year ago in Shenzhen for an undisclosed amount because the US has banned US companies such as Qualcomm from supplying the Chinese giant with certain components, including chips. Export restrictions required a financial tax. Huawei said third-quarter revenue fell 38% to 135 billion yuan (€ 18.22 billion) in the fourth quarter in a row. The x86 server division is not a key division of Huawei. The company has developed its own servers for its cloud computing business, powered by ARM-based processors using Huawei's Kunpeng technology. Huawei has built strong business relationships with government-backed companies in Henan Province and, according to unnamed sources, has established a subsidiary called Xfusion in the capital of Zhengzhou Province to develop a business related to Kunpeng-based technologies. The x86 division can give it more growth opportunities. Smartphone maker Honor said its separation from Huawei had allowed it to re-establish business relationships with major suppliers because it was no longer subject to US restrictions.