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September 27, 2017

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Google's Motorola buy may reshape Asian phone makers

SEOUL/TAIPEI -- Asian handset makers using Google's Android operating system might turn to rival platforms such as Microsoft's Windows after Google upended the mobile landscape by buying Motorola Mobility Holdings for US$12.5 billion.

Taiwan's HTC and Korea's Samsung Electronics have sold millions of mobile devices running on the free Android device, catapulting Google to the top slot in the booming global mobile software market.

But the acquisition of Motorola could turn Google from a partner to a competitor for more than 30 other Android-handset companies.

"The deal will make most Android players realize how dependent they are on Google and how quickly Google's plans can change their businesses," said Francisco Jeronimo, an analyst at research firm IDC.

Wall Street quickly anointed Microsoft a winner in the deal, with Windows potentially benefiting if the acquisition alienates the other phone makers that rely on Android.

Android held a 43.4 percent share of the smart phone market at the end of the second quarter, ahead of Nokia's 22 percent, according to data from research firm Gartner. Apple ranked third with 18 percent, the data showed.

Shares in Motorola's Asia's suppliers jumped on the deal.

Foxconn International Holdings Ltd., the world's top contract cell phone maker, which counts Motorola as a client, surged as much as 17 percent on prospects of more business from the new combination.

Shares of Compal Communications Inc. and Arima Communications were among a slew of Motorola suppliers that hit the 7-percent daily limit in Taiwan.

"Everybody is betting on a Motorola turnaround. Motorola will get more help from Google to push its Android handsets with the deal," said Yuanta Securities analyst Bonnie Chang in Taipei. "Outsourcing companies such as Foxconn International and Compal Communications will benefit directly the most."

Shares in Samsung, which has businesses from chips to TVs and energy as well as phones, ended 6.1 percent higher in a broader market up 4.8 percent in post-holiday trade on Tuesday. Fellow Korean phone maker LG Electronics edged up 0.3 percent.

HTC closed up 3.1 percent in a Taiwan market down 0.3 percent.

Some brokers said the Motorola deal could be Google's way to provide support to Android players.

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