Huawei is going to sell its x86 server business, after US sanctions left it unable to acquire the chips needed to build the equipment, according to a Bloomberg report. Negotiations with possible bidders continue, with a newswire report saying that the buyer may be a consortium that includes a government-supported buyer who asked to remain anonymous.
The value hasn’t been disclosed but is thought to be several billion yuan. A billion yuan exchanges for about $156 million. The rumors aren’t new since, in July, Chinese media reported that the company was thinking about selling a portion of its x86 server division once Intel’s export license to Huawei reaches its end of life and components supplies dry up.
The sanctions crippling the Chinese giant were implemented during the Trump era amid trade wars with China but have been kept in place by the Biden administration. The sanctions blocked American companies to work with Huawei equipment, but in addition also prohibiting companies, including Intel and AMD, to trade with the company.
Huawei reported a 29% year-on-year revenue drop in this year’s second quarter. Eric Xu, the company’s chairman, said the decline was due to the external challenges on its once-lucrative consumer business. In the third quarter, the company saw a 38% year-on-year decline, while maintaining overall profitability.
Down but not out
This is not the first time the company has had to sell a business unit. In November last year, it had to dissociate from its midrange smartphone brand Honor. The company described the move as an honorable choice, made to ensure the sub-brand survived.
Cutting the x86 server line does not mean the company is going out of the data center business altogether, given that it also provides Arm-based Kunpeng technology. In September 2021, the firm announced a three-year $100 million investment for small and medium-sized businesses to build up its Huawei Cloud.
Last year we wrote a blog stating; Huawei is heading towards bankruptcy, desperate for a way out. Huawei won’t go bankrupt, but if it needs to keep selling business units, there won’t be much left either.