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UPDATE 1-Google to buy part of HTC's smartphone operations for around $1 bln -source

-source@

* The deal will not involve purchase of direct stake -source

* HTC will continue to run its remaining phone business-source

* HTC to hold press conference at 0200 GMT (Adds details)

HONG KONG/TAIPEI, Sept 21 (Reuters) - Alphabet Inc's Google is set to announce a deal to acquire part of Taiwanese firm HTC Corp's smartphone operations for about $1 billion, a source with direct knowledge of the matter said on Thursday.

The deal will not involve the purchase of a direct stake and HTC will continue to run its remaining smartphone business, the source said, declining to be named as the information has not been publicly announced.

HTC said in a filing to the stock exchange that it would hold a news conference at 10:00 a.m. Taipei time (0200 GMT) on the signing of an "important cooperation agreement."

HTC shares were on a trading halt on Thursday.

HTC is a long-time partner of Google and manufactures the U.S. firm's latest Pixel smartphone.

Google's strategy of licensing Android for free and profiting from embedded services such as search and maps has made Android the dominant mobile operating system with some 89 percent of the global market, according to IDC.

But it has long been frustrated by the emergence of many variations of Android and the inconsistent experience that has produced. Pushing its own hardware will likely complicate its relationship with Android licensees, analysts said.

HTC, which once sold one in 10 smartphones globally, has seen its market share dwindle sharply in the face of heated competition from Apple Inc, Samsung Electronics Co and Chinese rivals.

Its share price has also suffered steep declines over the past couple of years. The stock has fallen 12 percent so far this year and the company is worth around $1.9 billion. (Reporting by Kane Wu and Jessica Macy Yu; Writing by Miyoung Kim; Editing by Edwina Gibbs)