Google has announced the sale of its Motorola Mobility unit to Chinese computer maker Lenovo in a $3bn deal.
The news comes less than a week after Lenovo announced it had acquired IBM's low-end server business for $2.3bn.
Google acquired the mobile phone company for $12.5bn in August 2011, mainly for its wealth of patents.
The deal with Lenovo allows Google to keep most of the patents, which could help fight future legal battles to protect its Android operating system, reports the BBC.
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With Google retaining most of the patents, it makes sense to offload its loss-making hardware division to Lenovo, which plans to use the Motorola know-how and brand to bolster its smartphone division.
In a statement, Google said the smartphone market was "super competitive" and that Motorola would "be better served by Lenovo".
More on Motorola Mobility
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- Google's Motorola Mobility files new complaint against Apple
- Google axes 4,000 Motorola staff
- US judge sets FRAND rates for Motorola patents in Microsoft case
The deal could make Lenovo the world's third largest smartphone maker after Samsung and Apple by giving the company access to the US and rapidly growing South American smartphone markets.
Market analysts said the key question for investors is whether Lenovo can turn around struggling Motorola business.
In a statement, Lenovo said: "The acquisition of such an iconic brand, innovative product portfolio and incredibly talented global team will immediately make Lenovo a strong global smartphone competitor.”
"We will immediately have the opportunity to become a strong global player in the fast-growing mobile space," said Yang Yuanqing, chief executive of Lenovo.