Chinese tech conglomerate Huawei Technologies is looking to sell its x86 server business to a consortium of buyers because the company is unable to secure server processors due to U.S. sanctions, according to a Bloomberg report.
Due to sanctions the US government has put in place against Huawei in recent years, the Chinese computer giant is in advanced talks to sell its server business to a group of buyers for possibly hundreds of millions of dollars. according to the Bloomberg report.
The problem stems mainly from US sanctions which prevented Huawei from purchasing x86 chips from Intel, Bloomberg said, citing people familiar with the matter.
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Huawei is looking to sell to a consortium that includes at least one government-backed buyer, with several potential Chinese government and private sector buyers engaging with the company in recent months, Bloomberg said. Huawei did not respond to a request for comment at press time.
Huawei dropped the list of global leaders in server market share from IDC in recent quarters.
The company failed to make the list of top five global market share revenue leaders in IDC’s Global Quarterly Server Tracking in Q2 2021, which means Huawei’s server business has Generated less than $ 1 billion in server sales globally, while shipping less than 150,000 servers. units worldwide in the quarter, according to IDC data.
Huawei has been going through difficult financial times since the United States banned American companies from supplying certain components to the company.
Huawei recently reported revenue of $ 21.2 billion for the fiscal third quarter, which is a 38% year-over-year drop in sales. This is the fourth consecutive quarter of declining sales for the company.
Additionally, Huawei had to sell its Honor smartphone business to the Shenzhen government last year after the United States banned US companies from supplying certain components, such as 5G chips, to Huawei.
It is essential to note that Huawei’s x86 server line was not a core group for the company, as Huawei developed its own servers for cloud computing powered by ARM processors.
According to Bloomberg, two potential buyers of Huawei’s x86 server business are Chinese state-owned Henan Information Industry Investment Co., which has partnered with Huawei’s server group, as well as the company. Chinese asset management Huaqin Technology.
Looking at the landscape of the global server market, Dell Technologies and Hewlett Packard Enterprise, alongside China-based H3C, have been two dominant leaders globally in recent years.
Global server market revenue declined 2.5% year-on-year to $ 23.6 billion in the second quarter of 2021, while 3.2 million servers were delivered, representing growth stable.