Google's Motorola Mobility handset unit will close its Texas factory by the end of the year, Motorola spokesman Will Moss said. News of the closing was first reported by the Wall Street Journal on Friday.
The factory opened in May 2013 and has 700 employees, the WSJ said.
The Fort Worth, Texas-based factory was part of Motorola's plan to build an American-made, low-cost smartphone. According to the Journal the strategy was hurt by high domestic operating costs and poor consumer demand.
"What we found was that the North American market was exceptionally tough," said Rick Osterloh, Motorola's president, in an interview with the Journal. Osterloh told the news outlet that closing the Texas factory did not relate to Motorola's impending $2.9 billion sale to Chinese computer maker Lenovo.
The smartphone company will continue to make its flagship Moto X phone and other devices at factories in other countries, the Journal reported.
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