Google announced Wednesday evening that it has signed a $1.1 billion “cooperation agreement” with HTC, the Taiwan-based consumer electronics company, as it looks to amp up its smartphone business.
Rumors of the deal have been swirling for months, but heated up earlier Wednesday after HTC planned to halt stock trading.
The deal sends “certain” HTC employees to work at Google and gives the search giant a non-exclusive license for HTC intellectual property. Google described the transaction as “continuing our big bet on hardware.”
“With this agreement, a team of HTC talent will join Google as part of the hardware organization,” noted Rick Osterloh, senior vice president in Google’s hardware division. “These future fellow Googlers are amazing folks we’ve already been working with closely on the Pixel smartphone line, and we’re excited to see what we can do together as one team.”
The two companies have worked together on hardware for several years, building the first Android smartphone and the first Pixel smartphone.
“This agreement is a brilliant next step in our longstanding partnership, enabling Google to supercharge their hardware business while ensuring continued innovation within our HTC smartphone and VIVE virtual reality businesses,” HTC CEO Cher Wang said in a statement. “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.”
Google did a similar smartphone hardware deal in 2011 when it bought Motorola for $12.5 billion, but sold it to Lenovo for about $3 billion three years later.
Osterloh, who joined Google last year, is the former COO of Motorola.
HTC was an early pioneer in smartphones, working with Microsoft on Windows Mobile and later focusing on Android devices, though its market share has been falling over the past decade.
More recently, the company has expanded into virtual reality hardware with the HTC Vive headset, in partnership with Bellevue-based Valve, but HTC has struggled to keep pace with Samsung and others in the global smartphone market.
HTC has its North American headquarters in Seattle. An HTC spokesperson confirmed that there are no changes planned to the office as a result of the deal, which is expected to close by early 2018.
The deal increases Google’s presence in the area, as it is approaching 1 million square feet with a planned office in South Lake Union, near Amazon’s HQ. It already has a large engineering center in Kirkland, Wash., and currently employs more than 1,900 people in Washington state.
Editor’s note: The headline was updated to reflect that the $1.1 billion does not include the licensing of intellectual property