HTC, the struggling Taiwanese smartphone maker, suspended trading of its shares on the Taiwan Stock Exchange starting Thursday (Sept. 21), which prompted renewed speculation that Alphabet’s Google intended to acquire the company.
And, as it turns out, that speculation is correct — or at least partially. Google has announced that it will be acquiring HTC’s Pixel division.
Yes, Google’s Pixel smartphone is made by HTC, but its market share in the global smartphone industry has declined from 9 percent in 2011 to a small portion of that today, noted the report. Despite once being one of the more popular smartphone makers in the United States, HTC has suffered from several consecutive unsuccessful smartphone launches. It recently started a separate division that sells virtual reality headsets.
Google has now announced that it will pay $1.1 billion for the Pixel division of HTC Corp — the all-cash deal will see Google snap up 2,000 HTC employees, roughly equivalent to one fifth of the Taiwanese firm’s total workforce. It will also acquire a non-exclusive license for HTC’s intellectual property.
Google will not be acquiring and manufacturing assets — the transaction underscores a ramping up of its ambitions for Android smartphones, particularly the one with its name on it.
“Google has found it necessary to have its own hardware team to help bring innovations to Android devices, making them competitive versus the iPhone series,” said Mia Huang, analyst at research firm TrendForce.
Pixel smartphones, only launched a year ago, have less than 1 percent market share globally with an estimated 2.8 million shipments, according to research firm IDC, and some analysts are wondering if this Google purchase will be a miss — much like its Motorola purchase a few years back.
“HTC is past its prime in terms of being a leading hardware design house, mainly because of how much it has had to scale back over the years because of declining revenues,” said Ryan Reith, an analyst at IDC.
“Unless Google really wants to control hardware for its other businesses like Home and Chromebooks in addition to smartphones, then I don’t see this as being a bet that pays off.”