HTC has rejected market rumors saying that it plans to sell its struggling smartphone unit to China-based smartphone vendor Xiaomi Technology.

According to a Chinese-language Economic Daily News (EDN) report, the deal could be announced early 2017.

The possibility is not high for HTC to sell its smartphone business unit to Xiaomi or any other China-based smartphone vendor as a number of business categories engaged by HTC are not eligible for China investment, said the paper, citing sources from the Investment Commission of the Ministry of Economic Affairs (MOEA).

HTC's core smartphone business was close to breaking even in the third quarter of 2016, and the vendor also launched three new models recently, the HTC 10 evo, HTC Desire 10 pro and Desire 650, aiming to heat up its smartphone business, said the paper.