Taiwanese smartphone maker HTC announced that its investment in the cloud gaming service provider OnLive will lead to losses of USD40 million.

According to HTC, OnLive recently completed an asset restructuring because the company was short of working capital and unable to raise new funds. HTC refused to provide further details about this investment.

In February 2011, HTC invested USD40 million in OnLive, which was considered a move to introduce more online games into its smartphone products. OnLive provides gaming services to PC users via streaming media and the company started to offer similar services to Android tablet and smartphone users from the end of 2011.

However, due to high costs of infrastructure, the U.S.-based company was forced into a restructuring, leading to its failure to achieve reasonable earnings. OnLive said its assets were recently acquired by a new company, but did not disclose the name of this new buyer. As a part of the restructuring, OnLive also implemented huge layoffs. OnLive's other investors include Warner Brothers, Autodesk, Maverick Capital, AT&T and British Telecom.

About a month ago, HTC announced that it would sell a part of its stake in the audio technology company Beats. HTC previously acquired a major stake in Beats for USD300 million, aiming to improve the audio system of its smartphones. One year after the closing of the deal, HTC said it would sell half of its stake back to Beats and keep the remaining 25%.