Google and HTC’s billion-dollar deal received regulatory approval in Taiwan last week, having been greenlit by the country’s Investment Commission, according to local media reports. Originally announced in late September, the move will see a significant number of HTC’s engineers move to the Alphabet-owned company which will also be granted a license to use the Taiwanese firm’s vast patent portfolio, all in exchange for approximately $1.1 billion. The approval of the Taiwanese regulator is in line with Google and HTC’s previous predictions that said the transaction is likely to close by the end of the year.
The Taipei City-based original equipment manufacturer is expected to use the majority of the fee over the first quarter of 2018 with the goal of stimulating what remains of its struggling smartphone business which has been posting losses for several years in a row now. The market’s short-term reaction to the approval was a universally positive one as HTC’s shares broke the $70 mark for the first time in half a year once the Investment Commission cleared the deal on Friday. Most analysts remain largely positive about the affair and believe HTC will benefit from it going forward as it will be able to streamline its operations while simultaneously cutting significant expenses in the form of salaries previously paid to veteran engineers, in addition to immediately benefiting from Google’s cash injection.
A less positive outcome would see the company additionally struggle in the smartphone market as many of its hardware and software talent is now leaving for Google and the departure may negatively affect its ability to continue innovating in the consumer electronics segment. Such a scenario still doesn’t appear to be concerning the majority of industry watchers who attribute HTC’s declining phone sales to an inefficient marketing strategy and strong competition in the local and global market, suggesting that a weaker ability to innovate is unlikely to additionally impact its commercial performance going forward. HTC’s focus on smartphones is also projected to diminish in the coming years as the company commits more resources to its virtual reality efforts pursued by the Vive unit. On the other hand, the deal will allow Google to develop the Pixel 3 lineup and its other future mobile products largely in-house and only rely on third parties to mass-produce its products.