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HTC’s smartphone unit is struggling, according to its financial results, with its August 2017 revenue ($100 million) down 54.4 percent year-on-year. Google is reportedly considering purchasing HTC’s smartphone unit, Taiwanese press has speculated, but not HTC’s Vive virtual reality (VR) business.

Alphabet-owned Google hasn’t confirmed the rumors, but discussions are said to be in progress, with a deal likely to be announced by the end of the year. It also isn’t clear if Google’s purchase of HTC’s smartphone unit would include the vendor’s smartphone intellectual property, although reports said Google would take on HTC’s R&D activities.

Google has moved forward in the hardware space recently, with the release of its Pixel devices. The company has also worked closely with HTC on such products, which makes a solidified relationship between the Californian and Taiwanese firms even more likely.

But HTC is said to have lost “elite engineers” to companies such as Huawei and Lenovo, according to Yuanta Securities analyst Jeff Pu, cited by Financial Times, who said the remaining top engineers “shouldn’t be too hard to poach away”. Knowing this, Google might think twice before moving in and acquiring HTC’s smartphone business.

This wouldn’t be the first time HTC has purchased a smartphone business. The company once owned Motorola until it sold the business to Chinese firm Lenovo. Google's ownership of the business would be short-lived, as it announced in January 2014 that it would sell most of ‘Motorola Mobility’ to Lenovo for $2.91 billion.

HTC’s drop in smartphone revenue has been attributed to slowing sales of the flagship HTC U11 smartphone, according to Focus Taiwan. In a move to generate more cash, HTC – which reported its lowest monthly sales for August 2017 since 2004 – has reportedly been looking at expanding its Vive VR unit, which has brought more attention to the business.

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