This deal also reflects Google’s mindset of sticking to its core businesses of software instead of focusing on hardware development trade. In addition to the phone operations, Lenovo will extract 2,000 Motorola patents.

Lenovo now eyes bigger role in tech arena by moving ahead of laptop and desktop systems.

"We are not only the number one PC company in the world but with this agreement we will become a much stronger number three smartphone company," said Wong Waiming, Lenovo's chief financial officer, on a conference call on Thursday.

It can be said that Motorola has proved to be a disappointment for Internet giant Google Inc as it agreed to sell the smartphone maker that it bought two years ago for USD 12.5 billion. 

Motorola Mobility lost more than USD 1.5 billion, after taxes and extraordinary items, since Google acquired the unit in May, 2012, according to a Lenovo filing on Thursday. Google will report its fourth quarter and annual earnings later on Thursday.

With its acquisition of Motorola, Lenovo is emerging as the most viable contender to global smartphone leaders Apple and Samsung - albeit still a distant third-place player.

The deal will allow Lenovo to step outside its China comfort zone and form its base in other regions, including United States, where Chinese smartphone makers have struggled, and Latin America, where Motorola remains a strong brand.

According to market reports, Google is expected to keep all the patents developed by the Advanced Technology group. The reports further claim that Lenovo might opt for license to use patents.

Lenovo's global smartphone market share following the acquisition will be more than six percent, compared with Samsung's 28.8 percent and Apple's 17.9 percent as of December 31, according to Lenovo and IDC.

For Motorola, Lenovo will pay USD 660 million in cash, USD 750 million in Lenovo ordinary shares, and another USD 1.5 billion in the form of a three-year promissory note, Lenovo and Google said in a joint statement.

(JPN/Agencies)