Google closes $1.1 billion deal for HTC design talent

Google’s $1.1 billion deal to acquire most of HTC’s smartphone design division has officially closed. Hardware VP Rick Osterloh announced the news in a blog post, hailing the arrival of an “incredibly talented team to work on even better and more innovative products in the years to come.”

The deal involves more than 2,000 HTC engineers moving over to Google. They will all remain in Taiwan; Osterloh notes that Taipei is becoming Google’s biggest engineering hub in the Asia-Pacific region. HTC’s contract manufacturing operations and VR division are not affected, but a substantial majority of the smartphone R&D team is joining Google, according to a person familiar with the matter.

The move represents a serious expansion of Google’s hardware efforts, and the most obvious application of the new engineering talent is in its line of Pixel smartphones. Google worked with a subset of its new HTC hires on a contract basis for the Pixel and Pixel 2, according to a source familiar with the development, and now the company will have a larger R&D team in-house.

Google is still a small player in terms of smartphones shipped, but the Pixel phones are aimed squarely at high-end market leaders like Apple and Samsung. Other Android manufacturers “know why we’re doing this,” Osterloh tells Bloomberg in an interview. “Quite honestly, Apple is doing really well in developed markets.”

While the Pixel line isn’t quite mainstream yet, the HTC deal is a concentrated effort to give Google’s hardware division an instant boost in bandwidth. “We don’t want it to be a niche thing,” Osterloh told The Verge in an interview last year. “We hope to be selling products in high volumes in five years.”