(Yicai Global) Jan. 21 -- Geely Holding Group, China’s biggest privately owned automaker, declined to comment on a media report that said its mobile phone unit is set to acquire Chinese handset maker Meizu Technology.

“We don’t comment on market rumors,” an official at Hangzhou-based Geely told National Business Daily today.

Negotiations between the two companies are underway, due diligence is ongoing, and the price of the acquisition has not yet been decided, online tech media 36Kr reported earlier in the day, citing insiders close to the matter.

Previous market speculation said that Geely was seeking a deal with an original equipment manufacturer to help develop its handset business, but the carmaker has never publicly commented on the conjecture.

Geely’s phone unit, Xingji Shidai Technology, was set up last September with a registered capital of CNY715 million (USD112.8 million). Li Shufu, Geely’s founder and chairman, also chairs Xingji Shidai. Geely has a 32.3 percent stake in the subsidiary, and Li owns 6.15 percent.

“The research and development of Xingji Shidai’s high-end cell phones is progressing in an orderly manner,” National Business Daily quoted the Geely official as saying.

Geely said last September that it would position Xingji Shidai in the premium segment of the market, with Li saying there was “a close connection in technologies” between intelligent vehicle cockpits and smartphones. 

Wang Yong, chief executive of Xingji Shidai, previously worked at Chinese tech giant ZTE and he was also deputy general manager at Taiwan-based computer and electronics maker Asus. 

Guangdong-based Meizu was founded in March 2003, and was one of the first to produce smartphones in China. Its annual sales peaked at 22 million units in 2016.

Over the past few years, Meizu’s market share has gradually shrunk amid fierce competition. In the third quarter of 2020 it sold just 240,000 phones, according to a report on China’s handset sales by industry consultancy Cinno Research.

Editor: Tom Litting