HTC sets up firm for technology innovation

Taipei, May 5 (CNA) Taiwan-based smartphone brand HTC Corp. (宏達電) said Thursday that it has set up a company in preparation for development of new technology.

HTC made the comments after local media reported earlier in the day that the new company was set up at the end of last year for developing the virtual reality business. The report added that the smartphone vendor is planning to spin off the new company in the future.

HTC did not directly respond to these aspects of the report.

According to the report, after HTC unveiled its first VR headset -- the HTC Vive -- in early 2015, the company started to consider the possibility of setting up a new company for VR technology development and product marketing.

After the establishment of the new VR company, supervised by HTC Chairwoman Cher Wang (王雪紅), at the end of last year, the report said, HTC is expected to spin off the new firm, which will be 100 percent controlled by Wang.

According to the business and industry inquiry services under the Ministry of Economic Affairs, the new company has paid-in capital of NT$1 million (US$30,864) and Wang is its chairwoman. The government data shows that HTC founder Cho Ho-tu (卓火土) and Wang's husband Chen Wen-chi (陳文琦) are on the board of directors.

The government data also indicates that the new company conducts a wide range of businesses, including the sale of computer equipment, information software, electronics material and precision machinery, and telecom equipment development, as well as online retail sales. In addition, the new company is involved in international trade and warehousing business, according to the data.

The new company is located on the eighth floor of HTC's headquarters in New Taipei.

Last week, Wang Tsung-ching (汪叢青), head of HTV Vive China, said in a report posted on China's website Sina that he has expected the global VR market will overtake the smartphone market in four years in terms of sales volume.

By extending its reach to the VR business with the launch of the HTC Vive, the Taiwanese smartphone brand has ambitions to take advantage of the emerging market to reduce the impact of escalating competition in the global smartphone market in both high-end and budget models.

The HTC Vive, unveiled at the Mobile World Congress (MWC) show in March 2015 and now sold around the world, is equipped with tracked controllers that allow wearers to inspect objects from every angle and interact with their surroundings. Market analyst said that HTC has gained the upper hand in VR technology development over its peers.

The report about a possible spin-off of the new VR company hurt market sentiment on the local main board Thursday, as many investors here fear that the smartphone brand will lose momentum in the VR business due to the departure of the new firm.

Shares of HTC faced heavy selling soon after the market opened and downward pressure continued into the end of the session, down 10 percent, the daily maximum decline, to close at NT$74.40 on the Taiwan Stock Exchange.

(By Esme Jiang and Frances Huang)ENDITEM/J