HTC declined to comment.
HTC has been trying to make its smartphones popular among users, but despite the high-quality of its premium devices it has released so far, its has lost nearly NT$10 ($0.32) per share in the second quarter because of weak demand for high-end Android phones and a failure to enter emerging economies such as the Chinese market. The company has been also plagued issues such as poor supply chain management, ineffective business strategies, and high turnover of senior management.
On the other hand, the declining demand for personal computers has forced Asus to reposition from its traditional business to smartphones. Part of the new focus has been China, where ASUS mid-tier ZenFones retail for under $300. Chief Financial Officer David Chang told shareholders on Friday that achieving the target of pushing overall shipments to 25 million units in 2015 depends on sales in China.
HTC has proven that it has the capability to design premium smartphones that ASUS lacks, but the smartphone maker's weak financial position and market prospects could mean slim possibilities for a deal with Asus. A takeover of HTC would not boost ASUS's position in China. HTC costs about $2 billion, so it could be easier for Asus to buy the HTC research and development team instead of the whole company.
In addition, HTC has a cross license agreement with Apple, which will be cancelled in case the the ownership of HTC changes.