Huawei Technologies Co Ltd is in talks with Digital China Group Co Ltd and other suitors to sell parts of its Honor smartphone unit in a deal that could fetch up to $3.7 billion, people with knowledge of the matter said.

Embattled Huawei is resetting its priorities in the face of US sanctions and will focus on its higher-end Huawei phones rather than the Honor brand which is aimed at young people and the budget conscious, they 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.

Digital China, the main distributor for Honor phones, has emerged as the frontrunner but other prospective buyers include Chinese electronics maker TCL and rival smartphone maker Xiaomi Corp, the people said.

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

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The Honor brand was established by Huawei in 2013 but the business mostly operates independently from its parent. It competes with Xiaomi, Oppo and Vivo in China’s highly competitive budget phone market and its phones are also sold in Southeast Asia and Europe.

Kuo Ming-chi, an analyst at TF International Securities, has said that any sale by Huawei of the Honor smartphone business would be a win-win situation for the Honor brand, its suppliers and China’s electronics industry.