Google to buy HTC’s smartphone expertise for $1.1 billion

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Google will be spending $1.1 billion to hire a team of engineers from the smartphone business of the struggling Taiwanese manufacturer HTC in a bid to bring more hardware expertise to its own mobile technology operations. This was announced late Wednesday night and reported by New York Times.

HTC said many of its estimated 2,000 employees affected by the deal were already working with the search giant on smartphones. Google leaned on HTC to manufacture its first Pixel smartphone, which was released last year, and is working with the company to produce the next version of the phone, which is expected to be announced on Oct. 4.

Bringing on the team from HTC is a sign that Google is doubling down on plans to produce its own hardware. Company executives have said it is important to tightly couple its artificial intelligence software, like the voice-controlled Google Assistant, with a range of devices.

Apple has followed a similar strategy for years, and that has provided the iPhone maker with an easier path when adding new features, such as augmented reality functions, since it designs nearly all of the internal parts of its phone.

Rick Osterloh, Google’s senior vice president in charge of hardware, said in a blog post that the HTC deal was a continuation of “our big bet on hardware.” Google also offers a smart speaker, the Google Home, and the Chromecast streaming video device.

The two sides did not disclose how many engineers and other key employees would head to Google as part of the deal. But Peter Shen, HTC’s chief financial officer, said the remaining company would still have more than 2,000 research and design staffers, down from about 4,000.

As part of the agreement, Google will also secure a nonexclusive licensing deal for some of HTC’s intellectual property.

HTC said it will continue to make its own smartphones — including a new premium model — although it plans to streamline its handset portfolio. By acquiring the HTC engineering group that had already been working with the company, Google secured hardware talent without taking on expensive assets, like manufacturing facilities.

The deal marks a reversal for Google. The company abandoned its plans to own a smartphone manufacturer when it sold Motorola to China’s Lenovo Group for $2.9 billion in 2014, less than three years after acquiring the handset business for $12.5 billion.

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