Xiaomi-invested gaming phone maker Black Shark is downsizing across all major departments, affecting nearly half of the company’s employees. China Star Market cites several sources as saying that Black Shark’s VR business is hardest hit by the redundancies, with a large number of employees recruited at the beginning of this year being impacted, and positions still under a probationary period all immediately terminated. The report states that the main reason behind the mass layoff is Tencent’s abandoning of its proposed acquisition of the company, which was first reported in May. Chinese media outlet 36Kr reported in January that Tencent planned to acquire Black Shark for RMB 2.7 billion, with the phone brand expected to shift its core focus to VR/AR technology amid Tencent’s moves to enter the metaverse. Black Shark completed seed and angel financing rounds when it was established in 2017. Its CEO told local media outlet 21jingji in May that the company was still looking for financing and acquisition opportunities in the wake of the Tencent deal collapsing. [China Star Market, in Chinese]