Google to buy part of Taiwan smartphone maker HTC for $1.1 bn

Taiwan’s struggling smartphone maker HTC said on Thursday 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 and development 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.

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 declined to give further details but stressed that HTC would continue to develop and sell smartphones under its own brand.

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The Taiwanese firm is 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.

The move 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.

Stiff competition

It 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.

“A team of HTC talent will join Google as part of the hardware organization. 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.”

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

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.

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

Shares in HTC were suspended before the announcement but are down more than 12 percent since the start of January. As its smartphone market share has dropped over the past few years, its shares have tumbled — from the high of Tw$1,300 in 2011 to Tw$69.3 as of Wednesday.

“The deal will give HTC some immediate benefits with positive market reaction expected in the short term as well as more capital and cost reductions,” said Jeff Pu, an analyst at Yuanta Securities.