Huawei could sell key server division following US blacklisting

The US ban has affected the company’s ability to acquire Intel processors for its servers

Huawei is reportedly in advanced talks to sell its x86 server division after the US blacklisting of the company has made it difficult to secure Intel processors.

The company is selling its business to a consortium that includes at least one government-backed buyer, according to a report seen by Bloomberg. The exact value of the deal is unknown but it could potentially be billions of yuan.

The report revealed that several potential buyers from the government and the private sector have emerged in recent months. Henan Information Industry Investment, a state-owned firm that has been a partner of Huawei’s server business, consumer electronics maker Huaqin Technology, and an asset management company representing the Hubei provincial government are involved in the talks.

The x86 server line is not considered to be a core business for the company, as it has developed its own servers for its cloud-computing business, powered by Arm-based processors that use its Kunpeng technology.

Huawei has built a close business relationship with government-backed companies in the province of Henan. For example, Huanghe Kunpeng, an arm of Henan Information Industry Investment, uses Huawei’s Kenpeng processors to develop server and personal computers. Huawei has also set up a subsidiary in the provincial capital of Zhengzhou to grow businesses related to Kunpeng-based technologies, according to Bloomberg sources.

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The US restrictions have hampered the company in a number of ways, including in August when its flagship smartphone, the P50, was set to ship without 5G support. It blamed the ongoing trade restrictions placed on the company by the US as the reason for this, underlining that its devices wouldn’t be able to run on 5G despite claiming to be the global leader in this technology.

In September, Huawei revealed it could potentially see revenue from its mobile business drop by almost £30 billion this year as the company continued to struggle in the face of US trade restrictions. Its rotating chairman, Eric Xu, said disappointing smartphone sales couldn't be offset by other business areas and suggested the company would continue to struggle.

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