The smartphone brand that Huawei sold off is regaining market share in China

A citizen shows Honor 50 smartphone on June 16, 2021 in Shanghai, China.

VCG | Visual China Group | Getty Images

GUANGZHOU, China — Honor, the smartphone brand Huawei spun off last year, is beginning to regain share in China’s fiercely competitive mobile phone market.

Honor notched a 15% market share in China in August, making it the third-largest smartphone player in the country — the first time it has held that position in a year, Counterpoint Research said in a report on Wednesday.

The smartphone company trails domestic rivals Oppo and Vivo. Sales of Honor devices rose 18% in August compared to July, making it one of the fastest growing brands in China.

In November, Huawei sold its budget brand Honor to a consortium of buyers including the government of Shenzhen, the city where its headquarters is located.

Huawei did that to ensure Honor survived because U.S. sanctions on the Chinese technology giant cut off supplies to key components and crippled its smartphone business, which included Honor at that time. Selling it off allowed Honor to get access to the key components like semiconductors again.

Honor’s resurrection will further intensify competition in the Chinese market in H2 2021.

Tarun Pathak

research director, Counterpoint Research

“After being spun off from Huawei, Honor was able to restore ties with component players,” Tarun Pathak, research director at Counterpoint Research, said in a press release. “Since then, leveraging its strong R&D [research and development] capabilities, Honor has launched new products and has been on a rapid recovery path in China.”

In January, Honor launched a mid-range phone called the V40, followed by the Honor 50 in June. This month, it launched the higher end Honor 3 series of smartphones which will be launched in China and other global markets including Europe.

“Honor is also targeting the premium segment with the Magic series, thus expanding its portfolio across price bands,” Pathak said.

“There was also a pent-up demand from the loyal Huawei and Honor consumers who held on to their devices and did not switch to other brands. Its strong relationships with distributors also helped Honor relaunch products on a large scale. Honor’s resurrection will further intensify competition in the Chinese market in H2 2021,” Pathak said.

Honor is targeting global markets but success there might be harder to find. Its global market share hit 3.7% in August, up from 1.5% in February, but that is mainly due to gains in China, Neil Shah, research director at Counterpoint Research, told CNBC.

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In international markets, Honor will face stiff competition from the likes of Apple and Samsung, as well as China’s Xiaomi, which as continued to steal the market share lost by Huawei.

“Growth outside China is likely to be gradual, as loyalty in the mid-segment remains low and Honor will also have to rebuild its distribution network. Then, there are also intensifying component shortages which can likely hinder Honor’s expansion in 2021,” said Varun Mishra, senior analyst at Counterpoint Research, in a press release.

Mishra was referring to the shortage of semiconductors that is currently affecting industries across the board from autos to consumer electronics.

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