Honor, once a reportedly discarded asset after its separation from Huawei, has defied expectations by carving out a strong position in the mid-to-high-end smartphone market. While the company is now eyeing an IPO, the challenging market conditions and intense competition make a successful debut uncertain.
Over three years ago, Honor, a sub-brand of Huawei, spun off due to stringent US sanctions that restricted Huawei's access to critical components like chips. To ensure its survival and avoid supply chain disruptions, Honor was sold to Shenzhen's state-owned assets supervision commission.
With around 8,000 employees and minimal resources, Honor started from scratch. There were rumors that one of the conditions for the acquisition was an IPO within three years.
Honor's valuation has surged despite market challenges, but its upcoming IPO faces hurdles. The saturated smartphone market and intense competition make it difficult to replicate Xiaomi's successful IPO in 2018, which was fueled by its IoT ecosystem narrative.
Honor has been aggressively working to establish its independent brand identity, distancing itself from its Huawei roots and shedding the label of being a "budget Huawei."
Industry insiders report that Honor has set an ambitious target of shipping 100 million smartphones annually by 2026, representing a 75% increase from 2023, a challenging goal amid the global smartphone market recovery.
Honor's performance in the Chinese market has been closely tied to Huawei's. When it was a sub-brand of Huawei, Honor held about 15% of the Chinese market. After the spin-off, its market share dropped to a mere 3%. But Honor has shown resilience, and with Huawei's absence, it has managed to regain some lost market share, reaching 18.1% in 2022.
However, Honor's market position has weakened since Huawei re-entered the smartphone market with its new Kirin chips and 5G devices in late 2023. Honor's market share in China declined from 17.1% in 2023 to 14.5% in the second quarter of 2024, dropping to fourth place overall. Huawei's resurgence has pushed it back into the number two spot in the Chinese smartphone market.
In the global market, Honor's market share is still categorized as 'Others,' not particularly prominent, and doesn't enjoy the same level of recognition as the well-known 'King of Africa,' Transsion, which has a strong reputation overseas, especially in emerging markets.
