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You are here: Home / Business Briefing / Is HTC Being Purchased by Alphabet?
HTC Suspends Shares, Fueling Alphabet Takeover Rumors
HTC Suspends Shares, Fueling Alphabet Takeover Rumors
By Samuel Gibbs Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
Taiwanese smartphone and virtual reality headset manufacturer HTC will halt shares from Thursday, pending the "release of material" information following media reports of a purchase by Google-parent Alphabet.

The once-powerful smartphone market player, which started life as an a manufacturer of other brands' handsets and now makes the Vive VR headset, has seen sales fall year on year for the best part of half a decade as competition from Chinese and South Korean rivals increased.

The Taiwan Stock Exchange said in a statement: "TWSE announced trading in the shares of HTC Corporation and the securities underlying the company will be halted starting from 21 September 2017 pending the release of material information. The company will apply for resumption of trading after the release of material information."

Local reports speculate that the "release of material information" could be an impending acquisition by Alphabet. Prior to the formation of the Alphabet holding company in 2015, Google acquired mobile phone pioneer Motorola in 2011 for $12.5bn (£9.24bn), gaining an important stock of patents in the process. It then sold Motorola to China's Lenovo in 2014 for $2.9bn without the collection of patents.

The reason for a purchase of HTC for Alphabet is not as clear cut as Google's grab for patents with Motorola. The Android maker recently began pushing its own-brand Google Pixel smartphones in 2016, which were manufactured by HTC on Google's behalf, but without the Taiwanese company's branding.

Some have suggested that a purchase of HTC by Alphabet would be made with the intent to turn the company into an in-house manufacturer for Google-branded products, dropping the HTC brand entirely. Many big name electronics companies, including Apple, rely on others to manufacture their products for them.

According to company filings, HTC's handset sales fell by more than 50% in August compared with last year's figures. But HTC has been in a systemic decline for years, from a height of 8.8% of global smartphone marketshare in 2011 shipping 43.5m handsets to just 0.5% today according to data from IDC.

The brand was the first to adopt Google's Android, and became a household name pioneering many of the premium smartphone manufacturing techniques that are in use today, including the metal unibody design. But HTC has failed to maintain a competitive advantage either on price, design or features with the dominant Apple or Samsung, or Chinese players such as Huawei which have undercut it.

Francisco Jeronimo, research director for European mobile devices for IDC said: "If you don't make money it's difficult to survive.

"HTC was one of the most innovative companies, and honestly it still is. But it is also a prime example of the fact that despite having the best product out there, if you don't know how to sell it, to work with the channels of retailers and networks, then you won't succeed."

According to supply-chain analysts, HTC's small shipment volumes also led to it struggling to acquire the chips necessary to make competitive smartphones in volume, which led to increasing manufacturing costs and therefore pressure on the firm's margins, losing out to Samsung, Apple and Huawei.

At the same time, HTC's rivals could rely on larger combined revenue streams, which helped support their smartphone businesses, be it from software and services or chip or equipment manufacturing for others. HTC does not make its own silicon and so is wholly reliant on third parties.

© 2017 Guardian Web under contract with NewsEdge/Acquire Media. All rights reserved.

Image credit: Product shot by HTC.

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