Alphabet Inc’s Google said it would pay $1.1 billion in cash to acquire the division at Taiwan’s HTC Corp that develops the US firm’s Pixel smartphones, its latest push into hardware manufacturing.
Google has sought to beef up its hardware capability with deals and product launches, and last year hired Rick Osterloh, a former Motorola executive, to run its hardware division.
“For Google, this agreement further reinforces its commitment to smartphones and overall investment in its emerging hardware business,” the search giant said in a statement.
Under the deal, Google will also receive a non-exclusive license for HTC’s intellectual property. The Taiwanese firm will continue to run its remaining smartphone business.
HTC is a long-time partner of Google and some analysts estimate that Pixel smartphones account for 20 per cent of HTC’s smartphone shipments.
But the Taiwanese firm, which once sold one in 10 smartphones globally, has seen its market share dwindle sharply due to competition from Apple Inc, Samsung Electronics Co, and Chinese rivals.
Its sharp decline had some analysts questioning the wisdom of the deal.
“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 as because of declining revenues,” said Ryan Reith, an analyst at research firm 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.”
The deal marks Google’s second major foray into smartphone manufacturing. It purchased Motorola Mobility for $12.5 billion in 2012 and sold it off to China’s Lenovo Group Ltd for less than $3 billion two years later.
“It’s still early days for Google’s hardware business,” Osterloh said in a blog post, adding it is focused on bringing together the best of Google software and hardware for a suite of its core products.
Other hardware initiatives include its acquisition of thermostats maker Nest for $3.2 billion in 2014, while product launches include voice-controlled speaker Google Home and virtual-reality device Daydream View.
