Google finalizes $1.1 billion acquisition of HTC's design unit

Google's $1.1 billion transaction absorbing the bulk of HTC's smartphone design arm has now been finalized. Rick Osterloh, the hardware VP, broke the news via blog post, celebrating the addition of an "incredibly talented team to work on even better and more innovative products in the years to come."

The agreement brings over 2,000 HTC engineers into Google's ranks. All of them will stay based in Taiwan; Osterloh points out that Taipei is now Google's largest engineering center in the Asia-Pacific region. HTC's contract manufacturing arm and VR business remain untouched, though the lion's share of the smartphone R&D staff is heading to Google, per a person close to the situation.

This step signals a major ramp-up of Google's hardware ambitions, and the clearest use of the newly acquired engineering expertise will likely be in its Pixel smartphone lineup. Google previously collaborated with a portion of these HTC staff on a contract basis for the original Pixel and Pixel 2, according to an insider close to the development, and now the company will operate a bigger in-house R&D unit.

Although Google still ships a relatively modest number of smartphones, the Pixel series is directly aimed at premium market frontrunners such as Apple and Samsung. Other Android makers "know why we're doing this," Osterloh explained to Bloomberg in an interview. "Quite honestly, Apple is doing really well in developed markets."

Even though the Pixel lineup hasn't fully broken into the mainstream, the HTC acquisition is a focused push to instantly expand the capacity of Google's hardware division. "We don't want it to be a niche thing," Osterloh shared with The Verge during an interview last year. "We hope to be selling products in high volumes in five years."