November 4, 2026 – ZTE has dismissed reports that it is preparing to spin off its consumer smartphone business into a joint venture with a major Chinese internet company and Shanghai state capital, calling the claims “not true.”
The company issued the denial on the evening of November 3 after speculation spread that it was in talks to bundle its smartphone operations into a new entity jointly held by ZTE, an unnamed internet giant and local state investors.
According to the circulated report, the smartphone unit was valued at roughly 40 billion yuan, with the internet company reportedly prepared to contribute about 8 billion yuan. The deal, if completed, would have covered ZTE’s consumer phone business in both China and overseas markets, while routers, home terminals and other non-phone assets would return to the group. The Red Magic gaming phone line was said to be excluded from the package.
ZTE told multiple media outlets that the story was false and that the report was “seriously inconsistent with the facts.” It also said it reserved the right to take legal action against the dissemination of inaccurate information.
The rumor gained attention because ZTE has already established a Shanghai-based subsidiary, Shanghai Shenqi Jiyuan Intelligent Terminal, which was set up in April 2025 and is wholly owned by ZTE. That entity has been linked in market speculation to a potential restructuring of the company’s terminal businesses, although ZTE has not confirmed any such plan.
ZTE’s consumer business remains a meaningful part of its overall operations. In the first half of 2026, the segment generated 18.63 billion yuan in revenue, up 8.09 percent year on year, driven by growth in smartphones, home terminals and mobile broadband products. The company has also been pushing its Nubia brand deeper into AI-enabled devices, including the NaviX Ultra smartphone launched in September with an integrated AI assistant.
Even so, ZTE’s smartphone presence in China remains small. Industry data for the third quarter of 2026 placed its domestic shipments around tenth position, with a market share near 0.3 percent. Like other manufacturers, it also faces rising component costs, particularly for memory chips, which are squeezing margins across the sector.
For now, the company has offered no further details on the future structure of its handset business. The latest response leaves the joint-venture story unconfirmed, while keeping ZTE’s consumer terminal strategy under close watch from investors and industry observers.
