HTC Selling Another Phone Factory To Fund VR Business

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Taiwanese tech giant HTC announced that it's selling its Shanghai-based phone factory to Xingbao Information Technology and will use the funds it receives from the sale to fuel its growing virtual reality (VR) ambitions. The Chinese company is purchasing a factory spanning 114,000 square meters for approximately $91 million. The facility in question was founded in 2009 and was mostly manufacturing smartphones intended for the local market. Its monthly production volume used to amount to two million devices circa 2011 but the facility hasn't been operating anywhere near its full capacity since 2013 when HTC's phone business started struggling in the market. The Taiwanese company said that the sale won't impact its smartphone unit in any shape or form, implying that the facility wasn't needed by the firm for some time now.

Rumors of HTC selling the Shanghai-based factory started circulating the industry in the summer of 2015, but the company repeatedly denied it has any intentions of seeking such a transaction. HTC already sold one smartphone factory in recent years as the company liquidated its Taoyuan City, Taiwan-based facility for approximately $183 million in late 2015. The Taoyuan-based tech giant has been struggling in the phone market for years now and was forced to resort to layoffs on several occasions since its troubles began. While the company is hoping that the HTC U and the HTC U Ultra will help its phone unit bounce back, it's also been shifting its focus to VR technology in recent years, while its smartphones are now largely manufactured by third-party contractors.

While VR is still just an emerging technology, many industry watchers believe this market will grow at a rapid pace in the following years, and HTC is planning to capitalize on that fact by being one of the first VR adopters on the planet. The HTC Vive headset that was developed in collaboration with Valve is reportedly doing relatively well, but it's still far from mainstream adoption due to its high price tag and a general lack of flagship software. Time will tell whether this gamble will pay off for HTC in the end, especially since the company is now investing even more resources into its VR business and is reportedly working on a new VR headset for mobile devices.

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