Black Shark, a Chinese smartphone maker, has recently launched a new round of layoff, which hits its VR business the hardest, according to ChinaStarMarket and the Paper. Approximately 60% of employees from Black Shark’s VR business unit were let go, according to the Paper quoting insiders. A large number of VR business employees recruited at the beginning of the year were laid off, and positions that were still in the probationary period were cancelled at once, per ChinaStarMarket.

Around the beginning of 2022, Tencent’s rumored acquisition deal of Black Shark became the center of attention, as the tech conglomerate reportedly planned to buy Black Shark for around RMB2.6 - 2.7 billion yuan. Black Shark, though little known, counts Xiaomi as its largest shareholder and specializes in making gaming phones. The company targets a niche market, especially when most middle to high end smart phones on the market already suffice the needs of casual gamers. Tencent has partnered with Black Shark in 2020 to develop a gaming phone.

By making gaming smartphones, Black Shark is well-experienced in providing smooth gaming experience on mobile devices, and utilizing Qualcomm chips — two things that could significantly aid Tencent in its metaverse scheme.

It was rumored that Black Shark would transition from a phone maker to a VR device maker after the acquisition deal completes. The company began recruiting for multiple VR related position after the deal was reportedly near complete, although neither companies confirmed the acquisition rumor.

Around May this year, the acquisition deal — which was seemingly smooth sailing and near complete — faced an indefinite halt. According to 21Jingji, Tencent gave up on the deal due to regulatory concerns and has invested in Black Shark instead, per the Paper.

Notably, Ma Xiaoyi, Senior Vice President of Tencent, shared the company’s XR related business plans in June this year at an Tencent conference. According to Ma, Tencent has established an XR business line which integrates software and hardware, and aims to seize the opportunity in the next 4-5 years to explore in various aspects such as software, content, system, tool SDK and hardware to create industry benchmark VR products and experiences.