Huawei Technologies Co., Ltd. is in talks with Digital China Group Co., Ltd. (SZSE:000034) and other suitors to sell parts of its Honor smartphone unit in a deal that could fetch up to CNY 25 billion ($3.7 billion), people with knowledge of the matter said. The assets to be sold have yet to be finalised but could include Honor's brand, research & development capabilities and related supply chain management business, two of the people said. The deal may be an all-cash sale and could end up smaller, worth somewhere between CNY 15 billion and CNY 25 billion, one of the people said.

Digital China has emerged as the frontrunner but other prospective buyers TCL Technology Group Corporation (SZSE:000100) and Xiaomi Corporation (SEHK:1810), the people said. The sources declined to be identified as the talks were confidential. Huawei and TCL declined to comment.

Digital China and Xiaomi did not respond to requests for comment.