Google to Buy HTC’s Smartphone Division for $1.1 Billion

Taiwan’s struggling smartphone maker HTC said on Thursday that it would sell part of its smartphone business to Google for $1.1 billion as the US giant looks to take greater control of its hardware business.

Google will take on half of HTC’s research staff — about 2,000 people — many of whom have already been working on the Silicon Valley firm’s Pixel handset, as well as intellectual property (IP) licensing.

Finalized By Next Year

HTC said in a statement the deal is expected to be completed early next year, pending regulatory approval. “For Google, this agreement further reinforces its commitment to smartphones and overall investment in its emerging hardware business,” HTC spokesman Peter Shen told a press conference in Taipei.

“In addition to the talented and experienced team of professionals, Google will continue to have access to HTC’s IP to support the Pixel smartphone family. This agreement also represents a significant investment by Google in Taiwan as a key innovation and technology hub,” he said.

HTC Will Continue Making Smartphones

He declined to give further details but stressed that HTC would continue to develop and sell smartphones under its own brand. Shares in HTC were suspended before the announcement but had fallen more than 12 per cent since the start of January.

The Taiwanese firm is currently working on its new flagship phone and will also continue to invest in areas such as virtual reality, artificial intelligence and internet of things, Shen added.

“The agreement is a testament to the decade-long strategic relationship between HTC and Google around the development of premium smartphones,” Google said in a joint statement with HTC.

Vertical Integration

The agreement will give Google more control of its mobile handset hardware as it seeks to bolster its presence in a market dominated by Apple and Samsung. The tie-up will give Google a greater ability to integrate smartphone hardware and its Android operating software in the same manner as Apple, a feature that is seen as helping the iPhone.

“It’s still early days for Google’s hardware business. We’re focused on building our core capabilities,” Rick Osterloh, senior vice president of hardware, said in a blog post, according to Bloomberg News.

Will Work on Future Pixel Phones

“A team of HTC talent will join Google as part of the hardware organisation. These future fellow Googlers are amazing folks we’ve already been working with closely on the Pixel smartphone line, and we’re excited to see what we can do together as one team,” Osterloh said.

It would not be the first foray into hardware for Google, which in 2012 acquired handset maker Motorola for $12.5bn, only to sell it two years later for less than $3bn.

HTC, once a star of the intensely competitive smartphone sector, has been struggling in the face of stiff competition from Apple and Samsung as well as strong Chinese brands like Huawei.

The firm’s revenue fell to a 13-year low of Tw$3bn ($100 million) in August and it suffered a ninth consecutive quarterly loss of Tw$1.95bn in April-June.