San Francisco: Ending months of speculation and ahead of launching second-generation Pixel smartphones in the US on October 4, Google on Thursday announced it will acquire a key part of the Taiwan-based HTC Corporation's mobile division team for $1.1 billion.
Certain HTC employees -- many of whom are working with Google to develop its Pixel smartphones -- will join the US tech giant. However, HTC will continue onward with its own smartphone business even after sending a good portion of its talent and operations over to Google.
Separately, Google will receive a non-exclusive license for HTC intellectual property (IP).
"HTC has been a longtime partner of Google and has created some of the most beautiful, premium devices in the market," said Rick Osterloh, Senior Vice President of Hardware at Google, in a statement.
"We're excited and can't wait to welcome members of the HTC team who will be joining Google to fuel further innovation and future product development in consumer hardware."
The transaction is expected to close by early 2018.
This is the second time Google has acquired a smartphone manufacturer. It announced a $12.5 billion buyout of Motorola Mobility six years earlier and in 2014, sold it again to Lenovo.
"Objective of the new deal for Google is to strengthen its position in the premium segment. Premium segment will adopt next generation technologies faster, and that demands a good level of hardware control," Tarun Pathak, Associate Director, Mobile Devices and Ecosystems, Counterpoint Research, told IANS.
"With top three smartphones manufacturers (Samsung, Apple, Huawei) gearing to become more vertically integrated and have more control on hardware, Google wants to be in a similar line, especially with Google Assistant and ARCore at heart," he added.
Meanwhile, HTC will continue to build the virtual reality ecosystem to grow its VIVE business, while investing in other next-generation technologies, including the Internet of Things (IoT), augmented reality and artificial intelligence (AI).
HTC will also continue to have best-in-class engineering talent, which is currently working on the next flagship phone, following the successful launch of the HTC U11 earlier this year.
Google will have access to HTC's IP to support the Pixel smartphone family.
Additionally, the agreement also represents a significant investment by Google in Taiwan as a key innovation and technology hub.
"Our unmatched smartphone value chain, including our IP portfolio, and world-class talent and system integration capabilities, have supported Google in bolstering the Android market," said Cher Wang, Chairwoman and CEO of HTC.
"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."
Slated for October 4 launch in the US, the second-gen Pixel handsets are expected to feature the same Snapdragon 835 chipset as every other high-end Android smartphone.
Rumoured specifications of Pixel 2 (or whatever it would be called officially) include 4GB RAM as well as "squeezable" pressure sensitive sides, similar to what we saw on HTC's flagship U11 smartphone. It is expected to feature IP68 water and dust resistance.
The phone could also come with an always-on display, similar to the one found in Samsung's Galaxy S8, S8+ and the recently-launched Galaxy Note 8.