Honor aims for an IPO as Huawei spin-off looks to cement position as China’s leading smartphone maker

Honor, the mobile handset business spun off from Huawei Technologies in 2020, is aiming for an initial public offering (IPO) to “diversify capital” after it grew to become China’s top smartphone vendor in the third quarter.

The Shenzhen-based smartphone maker is looking to “continue to optimise its shareholding structure, attract diversified capital, and enter into the capital market through an IPO,” according to a notice issued by Honor’s board on Wednesday.

No financial details, location or timetable for the planned transaction were released.

As the company begins the IPO preparation process, it will make changes to the composition of its board of directors “to embrace greater diversity for meeting the relevant governance and regulatory requirements”, the notice said.

Honor also confirmed that Wu Hui, a veteran state-owned enterprise executive, will take over as chairman of the board, replacing Wan Biao who will serve as vice-chairman.

The IPO announcement comes after reports that the company brought in Wu, former chairman of the Shenzhen Water and Environment Group, as chairman to speed up the company’s efforts to pursue a public listing.

Honor’s ascent to the top of China’s smartphone vendor rankings has been attributed by analysts to its diverse portfolio of handsets, bricks-and-mortar retail expansion via partners, and release of competitively-priced new models.

Honor, which celebrates its third anniversary this month as an independent company, reclaimed the top smartphone vendor spot in mainland China last quarter with a market share of 18 per cent and total shipments of 11.8 million units, according to data from research firm Canalys.

Honor was followed closely by Oppo, Apple and Vivo, each with a 16 per cent market share, and then Xiaomi, with a 14 per cent share of the China market in the third quarter, according to Canalys.

Honor last led the market in the first quarter of 2022, with a 20 per cent market share and total shipments of 15 million units.

Honor also achieved 8 per cent growth in the European market as the only brand among the top five to grow year on year, according to a separate report by Counterpoint Research this week.

Established in 2013, Honor’s budget-priced handsets previously helped Huawei overtake Apple and Samsung Electronics on the mainland, the world’s largest smartphone market. Under privately-held Huawei, Honor offered trendy low-priced smartphones that cost between US$150 and US$220.

Huawei, which was added to the US trade blacklist in May 2019 and saw tightened restrictions on access to advanced chips in 2020, sold Honor to a consortium of more than 30 agents and dealers to spare that business from sanctions.

The consortium, Shenzhen Zhixin New Information Technology, was founded by Shenzhen Smart City Technology Development Group, which counts state-owned investment firms in the southern tech hub as its main shareholders.