The global smartphone market is entering one of its most tense periods in recent years. The primary systemic factor has been the sharp surge in memory chip prices, which directly impacts device manufacturing costs and forces makers to either raise retail prices or reduce their product lineups. It is against this backdrop that media reports emerged regarding a potential restructuring of one of China's major telecom players, ZTE. According to BigGo, the company allegedly discussed transferring its mass consumer division to a new joint venture that was to include a major internet company and Shanghai state capital.
What Was Reported About the Deal and Its Structure
According to the same reports, the estimated value of the transferred business was around 40 billion yuan (approximately $5.6 billion), with the internet partner's contribution valued at 8 billion yuan. At the same time, it was claimed that the final terms of the deal, equity distribution, and ownership structure had not yet been agreed upon. Rumor had it that the restructuring would not affect all areas of the mobile division: RedMagic gaming smartphones were planned to be kept within the ZTE group, while the production of routers and home terminals would be returned to the parent company. The joint venture itself was supposed to focus on mass consumer smartphones for both Chinese and international markets. Notably, back in April 2025, ZTE established a subsidiary named Shanghai Shenqi Jiyuan Intelligent Terminal, which observers linked to preparations for potential organizational changes.
Company Denial and Legal Warnings
However, on November 3, 2026, ZTE issued an official statement declaring that reports regarding the transfer of its smartphone business "seriously diverge from reality." The company additionally reserved the right to hold the authors of the publications and all distributors of false information accountable. Consequently, the information concerning the joint venture, its value, and participants has not received official confirmation, and ZTE's public stance has effectively closed the subject of the deal at the corporate communications level.
Mobile Business Figures: Pressure on Shipments
Interest in the potential restructuring is logically tied to the challenging situation within ZTE's mobile segment. In the third quarter of 2026, the company ranked only tenth in the Chinese smartphone market, with its device shipments dropping by 52% compared to the same period last year. Meanwhile, the group's overall financial position looks more resilient: ZTE's total revenue for the first nine months of 2026 grew by 16.23% to reach 116.838 billion yuan, with computing infrastructure accounting for 38% of that figure. This exact imbalance — a weakening consumer mobile segment amid growing B2B areas — explains why the market is monitoring any signals regarding asset redistribution so closely.
Pivot to Artificial Intelligence
In parallel with market pressures, ZTE is reshaping its business with a strong emphasis on artificial intelligence, advancing the strategies «All in AI» and «AI for All». Specifically, the company is cooperating with ByteDance on AI smartphones and the integration of the Doubao Phone Assistant. Taken together, these steps indicate that even if the smartphone business remains within the group, its architecture and product logic are already shifting: the focus is moving from pure hardware competition to intelligent device features, which could become a key factor in fighting for market share amid soaring memory costs.
