Is Qihoo 360 planning to buy a mobile phone manufacturer? [UPDATED]

Update: Reports in the Chinese press are now suggesting that Qihoo has invested US$400 million in a joint venture with smartphone maker Coolpad. However, these reports have not been officially confirmed.

Chinese web security company Qihoo has been interested in getting into the mobile phone game for quite a while now. Back in 2012 the company took several stabs at making a mobile phone, each with a different manufacturing partner, but none of them really took off. The company has also made other attempts at carving out a niche for itself in the hardware space, but mobile phones remain in the company’s sights. Recently, industry insiders have been telling the Chinese press that Qihoo plans to enter the mobile game again by acquiring a handset manufacturer outright, spending as much as RMB 5 billion (US$800 million) in the process.

On its face, it’s a rumor that makes sense: Qihoo has massive cash reserves in the bank that could be brought to bear in any acquisition, and Qihoo CEO Zhou Hongyi has reportedly been spending a lot of time in Shenzhen, China’s gadget-manufacturing capital, over the past year. In fact, he’s announced that he’s planning on moving either to Shenzhen or nearby Dongguan imminently.

Zhou says he’s moving for the food, and the company has explained his trips to China’s southern manufacturing hub as him checking up on the company’s child-tracking wearable gadget. But interestingly, when questioned directly about the rumors, Zhou ridiculed the US$800 million number that’s been bandied about, but did not deny that Qihoo is looking to acquire a mobile handset maker:

I’m preparing to move and haven’t yet decided whether I’m going to Shenzhen or Dongguan, and you guys come up with such a sensationalist acquisition plan? Even a high-profile investor like Lei Jun only invested US$200 million in Midea; you need to seriously think about what kind of a concept US$800 million is.

See: Xiaomi plows $200 million into Chinese appliance maker Midea to get ahead in the smart home race

Historically speaking, Zhou Hongyi has not been one to pull punches or mince words, so the lack of a direct denial suggests that Qihoo really is looking to acquire a mobile handset manufacturer. And with Zhou admitting he’s planning to move south, the deal could already be nearly finished (it’s hard to believe he’d really move away from his company’s Beijing headquarters just for the food).

Is China’s smartphone market about to have yet another entrant in the high-performance-but-low-price market segment? All signs point to yes.

(Source: Techweb)