Before the Lunar New Year, HTC disclosed that a portion of its extended reality (XR) research and development team would be incorporated into Google during the first quarter of 2025. Furthermore, Google will acquire non-exclusive licensing rights to HTC's XR intellectual property for a sum of US$250 million.
This transaction has prompted reflections on HTC and VIA's prior prominence in the capital markets, during which they posed significant threats to Apple and Intel. Currently, these once-mighty corporations are selling off their primary businesses.
Google's expanding influence
HTC, once revered, is now seen as a talent pipeline for Google, while VIA has completely exited the PC market and relies on subsidiaries like VIA Labs and VIA Next to generate profits. With both companies having previously held leading positions in global IC design and the smartphone battlefield, their prospects remain uncertain.
Following Google's acquisition of a segment of HTC's smartphone division for US$1.1 billion in 2017, market anticipations suggested that the two entities would disclose a further deal post-Lunar New Year; nonetheless, the latest announcement arrived earlier than expected.
VIA's journey from triumph to transformation
Cher Wang established VIA Technologies, which encompasses the semiconductor and electronic technology industries, including VIA, Vate Technology, HTC, Chander Electronics, and Xander, consistently broadening its domain. The company has made significant investments in China's semiconductor sector, particularly in Shanghai Zhaoxin.
In 1999, Wang's VIA capitalized on Intel's strategic errors to achieve prominence. VIA's market capitalization surpassed NT$120 billion (US$3.7 billion) in 2000, marking its zenith. Nevertheless, VIA's litigation and declining profits and losses began in 2003 as a result of underestimating Intel's capabilities and market conditions.
Despite experiencing a downturn, VIA declared unprecedented profits in 2020, despite operating losses, mostly due to the sale of some chipset technologies to indirectly-held Shanghai Zhaoxin, yielding significant disposal gains.
The profit trend persisted until 2021, primarily thanks to Intel's payment of US$125 million to acquire R&D professionals from Centaur, an x86 CPU design subsidiary of VIA. These substantial earnings primarily stemmed from asset divestitures rather than operational success.
VIA's strategic pivot
VIA has initiated a comprehensive transformation, transitioning from IC design to embedded platforms and, most recently, AI solutions. This transformation focuses on smart manufacturing, transportation, and healthcare. Nonetheless, its core business performance remains inadequate.
While the primary operations struggle, subsidiaries have emerged as bright spots, such as USB chip specialist VIA Lab, which is directly linked to the growth of the notebook market. In recent years, VIA formed another firm, VIA Next, which is responsible for customized IC backend and system design services, thereby expanding its position in China. This plan capitalizes on China's intensified quest for semiconductor independence, securing AI chip NRE orders while ramping up wafer starts at TSMC.
VIA chairman Wenchi Chen sat at the main table of a crucial dinner with TSMC and the foundry's other IC design clients in 2024, emphasizing its importance. However, recent estimates indicate that order quantities have been cut in half due to increased US limitations on AI processors.
The company's heavy reliance on Chinese orders has made its operational performance particularly vulnerable to US restrictions against China.
HTC's rise and fall
Following VIA's decline, HTC rose to prominence, successfully transforming from an OEM to a significant mobile brand. In 2008, HTC emerged as a key player in the Android wars, competing with Apple and Samsung, earning global praise while seemingly allowing the market to forget the lessons learned from VIA's fall.
Nonetheless, HTC was unable to sustain its dominance, suffering a 70% profit decrease in 2012 and facing substantial losses in 2013, signifying the onset of its downhill trajectory.
With no products capable of offsetting smartphone losses, HTC sold personnel involved in the Pixel phone's development and leased patents to Google for US$1.1 billion, effectively surrendering its elite team and intellectual property rights.
The virtual reality gambit
Besides smartphones, HTC ventured into virtual reality (VR) in 2015, garnering attention through endorsements from Nvidia and Meta Platforms for the metaverse, underscoring its advanced VR technology.
Wang had consistently stated that HTC has been advancing its VR business for an extended period, anticipating that 2023 would be a year of triumph.
Nevertheless, HTC's VR business has been the subject of persistent speculation regarding its potential sale, but Wang has categorically denied any such plans.
The final chapter?
Presently, HTC has initiated the sale of its core teams and associated technology licenses in mobile and VR/XR.
The transferred employees emerge as the clear winners, trading their seats at a struggling Taiwanese company for spots at a global tech giant.
HTC, which has experienced 26 consecutive quarters of losses, is expected to achieve profitability through this transaction, according to the market. However, the question remains: what valuable assets does HTC still retain?
It is widely believed that all marketable items have been sold, leaving HTC with just land, buildings, and other fixed assets, in addition to its complex relationship with VIA. While VIA maintains Zhaoxin, VIA Next, and VIA Lab as protective entities, the market remains skeptical about HTC's potential revival, given its lack of new products or technological advantages.