Huawei is set to sell much of its Honor smartphone brand, according to Reuters sources.
Battered by U.S. sanctions, the Chinese firm is reportedly rethinking its priorities.
It wants to focus on its high-end phones, and ditch the budget-focused Honor offering.
The assets to be sold have yet to be decided, but could include the brand, research and development facilities and other units.
That could raise up to 3.7 billion dollars.
The front-runner for the acquisition is seen as Digital China Group.
It’s the main distributor for Honor phones.
But other contenders include electronics maker TCL and rival smartphone brand Xiaomi.
There was no immediate comment on the reports from Huawei or Digital China.
The Honor brand accounts for about a quarter of Huawei’s phone shipments.
But analysts say profit margins at the budget end of the market are razor thin.
Honor phones compete with value brands including Xiaomi, Oppo and Vivo in the Chinese market, and are also sold in Southeast Asia and Europe.