Huawei Technologies will spin off its smart car software business unit into a new company that will be valued at up to $34.67 billion.
In a strategic move, the Chinese technology giant, is poised to spin off its Intelligent Automotive Solution (IAS) business unit into a new independent entity, reports Reuters. The new detached IAS will engage in R&D, production, sales of intelligent automotive systems and will also absorb the group’s other auto-related assets and resources outside the IAS business unit, it is believed.
The new company is poised to emerge as a formidable player in the smart car arena with access to Huawei’s cutting-edge systems and resources. The spin-off could lead to greater collaboration and innovation with key industry players, particularly automotive giants like Changan Auto, FAW Group, and Dongfeng Motor Group, who are set to acquire substantial stakes in the new entity. Huawei will likely remain the single largest shareholder with 40% to 50% for at least the next two to three years, said two insiders to Reuters.
Challenges for Huawei
The decision to spin off the IAS business unit stems from Huawei’s recognition of the challenges it faces in scaling its smart car division independently.
Amidst stiff competition from domestic tech giants like Alibaba and Baidu, Huawei’s progress has been hampered by the lingering effects of U.S. sanctions. The spinning off of IAS is seen as an effort to recoup capital and focus on its core telecommunications and consumer electronics businesses. The unit has struggled to grow and is the only money-losing unit among Huawei’s main six.
Huawei has been a target of criticism from governments and businesses around the world. The company has been accused of using its technology to spy on behalf of the Chinese government, and it has been excluded from certain markets, such as the United States. Huawei has denied these allegations, and it has said that its technology is used only for legitimate purposes.
Despite these challenges, Huawei remains a global leader in the telecommunications and technology industries.
Featured image: Huawei
