Google has bought part of HTC’s mobile phone division for $1.1bn (£820m), a return to hardware ownership for the company.
The deal will see 2,000 HTC staff join the US internet giant and underlines Google’s broadening ambitions in smartphone production.
Google develops the Android operating system used in more than 80pc of the world’s smartphones but largely relies on manufacturers like Samsung, Huawei and HTC itself to make and sell its phones, unlike Apple, which controls the design and development of both software and hardware.
Last year it released the first Google-branded phone, the Pixel, which is manufactured by HTC, and is gearing up to release a new model next month, but having thousands of staff join the company will expand the venture. The Pixel has been well received but only produced in small quantities.
Of the 2,000 staff moving from HTC, roughly about a fifth of its workforce, many are already working on the Pixel. Google is also acquiring a licence for HTC intellectual property.
The Taiwanese group said it would continue to produce its own phones, including a new flagship device, as well as continuing its Vive virtual reality headset and investing in other technologies.
Hanging over the deal will be the ghost of Motorola Mobility, the phone maker Google paid $12.5bn for in 2011. Motorola struggled under its ownership and it was sold to Lenovo for $2.9bn in 2014, retaining certain patents. Two other hardware companies, Nest and Dropcam, have also been seen as disappointments under Google ownership.
“HTC has been a longtime partner and has created some of the most beautiful, high-end devices on the market,” Rick Osterloh, the head of Google’s hardware department, said.
The Taiwanese company, whose shares had been suspended pending the announcement, was responsible for some of the first Android handsets capable of competing with the iPhone. But it failed to capitalise and as Samsung moved into the high-end of the market, HTC’s market share collapsed. Shares have fallen 95pc since 2011.
The company’s chief executive Cher Wang said it still had a bright future. “We believe HTC is well positioned to maintain our rich legacy of innovation and realize the potential of a new generation of connected products and services,” she said.