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Microsoft on Wednesday announced it reached an agreement to sell the company's entry-level feature phone assets to FIH Mobile Ltd., a subsidiary of Hon Hai/Foxconn Technology Group, and Finnish company HMD Global, Oy for $350 million.
And Nokia, which had sold its entire handset business to Microsoft in 2014, said it has signed an exclusive 10-year licensing deal with HMD Global Oy to create Nokia-branded phones and tablets, manufactured by Foxconn's FIH Mobile Ltd.
As part of Microsoft's deal, FIH Mobile Ltd. will also acquire Microsoft Mobile Vietnam - the company's Hanoi, Vietnam, manufacturing facility. Upon close of this deal, approximately 4,500 employees will transfer to, or have the opportunity to join, FIH Mobile Ltd. or HMD Global, Oy, subject to compliance with local law.
The deal will only affect Microsoft's feature phone business, which is currently still using the Nokia brand for basic phones. Microsoft said it would continue to develop Windows 10 Mobile and support Lumia phones such as the Lumia 650, Lumia 950 and Lumia 950 XL, and phones from OEM partners like Acer, Alcatel, HP, Trinity and VAIO.
As part of the deal, Microsoft will transfer substantially all of its feature phone assets, including brands, software and services, care network and other assets, customer contracts, and critical supply agreements, subject to compliance with local law. The transaction is expected to close in the second half of 2016, subject to regulatory approvals and other closing conditions.
Nokia, which currently makes most of its sales by telecom network equipment, said on Wednesday it will receive royalty payments from HMD for sales of Nokia-branded mobile products, covering both brand and intellectual property rights.
"Instead of Nokia returning to manufacturing mobile phones itself, HMD plans to produce mobile phones and tablets that can leverage and grow the value of the Nokia brand in global markets," said Ramzi Haidamus, head of Nokia's patent unit.
Nokia declined to give any timetable for new devices. The deal between Microsoft and HMD is expected to close in the second half of 2016.
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