(Yicai Global) Jan. 10 -- Chinese internet giant Tencent Holdings is reportedly planning to acquire Xiaomi-backed Blackshark Technologies, China's leading maker of gaming phones, for as little as CNY2.6 billion (USD407.9 million).

Tencent has beaten down the price of Blackshark to CNY2.6 billion or CNY2.7 billion, tech news outlet 36Kr reported today, citing an insider. The person said that represents a more than 10 percent discount on the Nanchang-based startup’s earlier valuation of CNY3 billion.

Xiaomi has agreed to the acquisition, the report said. The Beijing-based handset maker is the largest shareholder of the Nanchang-based startup, which sells phones under the Black Shark brand name, with a 46.4 percent stake.

Blackshark has launched nine handset models since being founded in 2017. As of last June, it was the country’s biggest producer of gaming phones by shipments.

China’s gaming handset market has limited capacity. Shipments tallied about one million units in 2020, far below that of mainstream handset brands. Competition also is heating up as big phone makers such as Vivo Communication Technology and Oppo Mobile Telecommunications bring out gaming models under their respective sub-brands iQoo and Realme.

But Tencent could make use of the resulting synergies. The Shenzhen-based WeChat operator needs to fill its hardware gap, an analyst told 36Kr. Before this, Tencent had been in contact with many owners of augmented and virtual reality projects, the person added.

Blackshark has expertise in the gaming sector and it has gained favor among some hardcore players, the analyst said, adding that the company has been working with US semiconductor maker Qualcomm to optimize its chip technology. Blackshark also began exploring the VR field in late 2021, the report said.

Editor: Emmi Laine