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The move aims to relaunch Honor by separating it from Huawei’s network equipment, a company that Washington accuses of being in the service of Chinese espionage, an accusation that Huawei denies.
The group is subject to sanctions that block access to American technology, including components and programs essential to the production and operation of cell phones, including chips, semiconductors or Google services.
Huawei Technologies Ltd.’s announcement does not include financial details, but said the company will no longer have a stake in Honor once the deal is concluded.
Huawei will keep its flagship mobile phone brand under the same name as the group.
The buyer is a jointly established company of a technology company belonging to the government of the Shenzhen city in the south of the country, where Huawei is headquartered, and an Honor reseller group.
Previous reports of a possible sale set the value of the transaction at 100 billion yuan (12.6 billion euros).
“The move was made to ensure Honor’s survival,” Huawei said in a statement.
The Chinese group is China’s first global tech brand, but it is at the center of tensions between Beijing and Washington over technology, security and espionage.
Donald Trump’s government has lobbied allies, including Portugal, to ban Huawei and other vendors from its telecommunications networks.
Honor, founded in 2013, is one of the best-selling mobile phone brands in the world.
Total shipments of Huawei and Honor phones fell 5% from a year earlier in the quarter ended June to 55.8 million units, according to consultant Canalys.
Sales in China rose 8%, but overseas sales fell 27%. Sales of Huawei mobile phones outside of China suffered as the company was prevented from pre-installing Google services due to US sanctions.
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