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Huawei intends to sell its server division due to US sanctions

 Huawei is in advanced talks to sell its x86 server business after the company's US blacklisting made it difficult to secure processors from Intel, the latest blow to the Chinese tech giant from US sanctions, Bloomberg reported.

Huawei is in advanced talks to sell its x86 server business after the company's US blacklisting made it difficult to secure processors from Intel, the latest blow to the Chinese tech giant from US sanctions, Bloomberg reported.   The Shenzhen-based company sells the server business to a consortium that includes at least one government-backed buyer. The exact value of the deal is not known at this time. But most likely in billions of yuan.  Several potential buyers from the government and the private sector have emerged in recent months. Henan Information Industry Investment, a Zhengzhou-based state-owned company that has been a partner in Huawei's server business, is one potential buyer.  Huaqin Technology, a consumer electronics maker, and an asset management company representing the Hubei provincial government are participating in the talks. It is not clear whether the companies are bidding separately or as part of the same union.  Huawei, once a national hero with dominant positions in mobile phones and communications equipment, has had to adjust operations since the Trump administration launched a sweeping campaign against it in 2018.  The company sold its Honor smartphone brand to a consortium led by the Shenzhen government for an undisclosed amount a year ago because the United States banned US companies such as Qualcomm from supplying certain components, including 5G chips, to Huawei.  Huawei faces a new setback due to sanctions Export restrictions led to financial losses. The company said third-quarter revenue fell 38 percent to 135 billion yuan ($21.2 billion), the fourth consecutive quarterly decline in sales.  The rotating chairman said in a statement that corporate business was stable while consumer divisions were significantly affected.  And the x86 server line was not a core business of the company. Huawei developed its own servers for cloud computing, powered by ARM-based processors using Huawei's Kunpeng technology.  The company has established strong business relationship with government-backed companies in Henan. Huanghe Kunpeng, the arm of Henan Information Industry Investment, uses Huawei's Kunpeng processors to develop servers and PCs.  Huawei also recently set up a subsidiary called Xfusion in the provincial capital, Zhengzhou, to grow businesses related to Kunpeng-based technologies.  And separating the x86 business may give it more opportunities to grow. Honor smartphone group said its split from Huawei has enabled it to resume trade relations with major suppliers because export restrictions do not apply to the company.


The Shenzhen-based company sells the server business to a consortium that includes at least one government-backed buyer. The exact value of the deal is not known at this time. But most likely in billions of yuan.


Several potential buyers from the government and the private sector have emerged in recent months. Henan Information Industry Investment, a Zhengzhou-based state-owned company that has been a partner in Huawei's server business, is one potential buyer.


Huaqin Technology, a consumer electronics maker, and an asset management company representing the Hubei provincial government are participating in the talks. It is not clear whether the companies are bidding separately or as part of the same union.


Huawei, once a national hero with dominant positions in mobile phones and communications equipment, has had to adjust operations since the Trump administration launched a sweeping campaign against it in 2018.


The company sold its Honor smartphone brand to a consortium led by the Shenzhen government for an undisclosed amount a year ago because the United States banned US companies such as Qualcomm from supplying certain components, including 5G chips, to Huawei.


Huawei faces a new setback due to sanctions

Export restrictions led to financial losses. The company said third-quarter revenue fell 38 percent to 135 billion yuan ($21.2 billion), the fourth consecutive quarterly decline in sales.


The rotating chairman said in a statement that corporate business was stable while consumer divisions were significantly affected.


And the x86 server line was not a core business of the company. Huawei developed its own servers for cloud computing, powered by ARM-based processors using Huawei's Kunpeng technology.


The company has established strong business relationship with government-backed companies in Henan. Huanghe Kunpeng, the arm of Henan Information Industry Investment, uses Huawei's Kunpeng processors to develop servers and PCs.


Huawei also recently set up a subsidiary called Xfusion in the provincial capital, Zhengzhou, to grow businesses related to Kunpeng-based technologies.


And separating the x86 business may give it more opportunities to grow. Honor smartphone group said its split from Huawei has enabled it to resume trade relations with major suppliers because export restrictions do not apply to the company.

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