Honor and Qualcomm: Rumours of a partnership could change everything, but….

Chinese smartphone brand Honor and American chipmaker Qualcomm are reportedly in talks to renew their partnership for the supply of chipsets to the former if we are to believe fresh rumours coming from Honor’s internal sources. If true, this move could end up being a major fillip to the brand, which was just sold by Huawei to escape American sanctions.

But then, things are not as simple as they appear.

As mentioned earlier, Huawei sold its Honor sub-brand in November 2020, under the effect of the US embargo against it and its subsidiaries. Shortly after the sale, rumours were already circulating that Qualcomm and the newly “independent” Honor brand were in discussions about a possible partnership.

This is a major collaboration – and an important one for Honor, which has stated its ambition to produce as many as 100 million smartphones by 2021. The agreement with Qualcomm will especially be helpful for Honor’s future high-end models – all of which were until recently powered by Huawei’s Kirin chipsets. With Huawei no longer part of the equation, it was imperative that Honor finds a viable alternative.

On Wednesday, Chinese financial publication Yicai (China’s equivalent of the Financial Times), the country’s largest financial media conglomerate reported that Honor and Qualcomm are in discussions to ensure that the partnership will be a done deal in the near future.

What was interesting about this article on Yicai was the assertion that Qualcomm is no longer required to take approval from the US Government to renew its collaboration with Honor. Since the brand is no longer attached to Huawei, it is no longer in the (in)famous “Entity List” in which Huawei still appears. As you are already aware, the US government prohibits American tech companies from collaborating with all the companies in this entity list.

If Qualcomm doesn’t need approval, what about Google?

If this information is confirmed, it’s a huge deal for Honor and the industry in general. When I say huge, I’m talking in terms of the implications. If Qualcomm doesn’t need any approval or licensing from Washington, what’s stopping Google from resuming discussions with Honor?

If this rumour is confirmed, we could not only see a Honor flagship coming to market with an 888 Snapdragon SoC in 2021 but also loaded with GMS (Google Mobile Services). All things said, neither Honor nor Qualcomm has yet officially announced anything.

But that’s not the only problem.

The real problem is that there is no guarantee that Honor continues to remain immune from fresh U.S. sanctions, even with Huawei being no longer part of the equation. Since the sale, Honor has been owned by a consortium called Shenzhen Zhixin New Information Technology, which consists of about 30 shareholders. Huawei has effectively declared that it has no involvement in this consortium. “Once the sale is completed, Huawei will not hold any shares or participate in any management or decision-making activities in the new company Honor,” the Chinese giant said in a statement on 17 November.

But, as Reuters explained in an article dated the same day, the consortium to which Honor is now attached sees the majority of its shares held by Shenzhen Smart City Development Group. This company is itself attached to the Shenzhen SASAC (State-owned Assets Supervision and Administration Commission).

This Chinese State-owned Assets Supervision and Administration Commission is a public agency responsible for the supervision of Chinese state-owned enterprises in Shenzhen, under the direct control of Beijing. What this essentially means is that Honor continues to be a state-owned firm.

Anyway, as we wait for the Honor/Qualcomm saga to enter its next phase, it would be interesting to see how the US government – especially the new one reacts to this new development.