Silicon Valley-based AI hardware startup Humane has been partially acquired by HP for $116 million, a significant discount from the $240 million it raised in venture capital funding. The acquisition, announced on Tuesday, has resulted in a chaotic day for Humane's nearly 200 employees, with some receiving job offers from HP and others being laid off.

According to internal documents and sources, hours after the acquisition was announced, several Humane employees received job offers with pay increases of over 30%, plus HP stock and a bonus plan. These offers were primarily extended to employees working on the company's core software, highlighting HP's interest in acquiring Humane's AI-focused software engineers. However, not all software engineers received job offers, and employees working on the AI Pin devices, including those in quality assurance, automation, and hardware, were notified that they were out of a job.

The acquisition marks a tumultuous end to Humane's journey as a standalone company. Despite being one of Silicon Valley's buzziest AI hardware startups, Humane's business had shown signs of struggling. The AI Pin, its flagship product, received negative reviews from early testers, and the company's Head of Product Engineering left to start his own company with other Humane executives. The product's charging case was also briefly deemed a fire hazard, and returns eventually outpaced sales, prompting the company to drop the price from $699 to $499.

Following the acquisition, Humane told customers to "recycle" their $499 AI Pins, which will mostly stop working in less than two weeks. The AI Pin's demise comes as other AI wearables are gaining traction, with Meta's Ray Ban AI smart glasses continuing to sell well and Rabbit's R1 landing in Best Buy stores. Apple also released a $599 iPhone packed with AI features, mimicking features of the devices that hoped to replace phones.

Despite the challenges, some Humane employees view the company as a moderate success story. Most startups do not sell thousands of devices, gain national attention, and get acquired for millions. The acquisition also provides some employees with a well-paying job at HP, allowing them to continue working on projects they started at Humane.

The acquisition is expected to bolster HP's AI capabilities, with the company announcing the formation of HP IQ, a new unit focused on integrating artificial intelligence into HP's personal computers, printers, and connected conference rooms. Humane's cofounders, Imran Chaudhri and CEO Bethany Bongiorno, will join HP IQ, along with the startup's AI operating system, CosmOS.

The deal's terms and the total number of Humane employees affected by the layoffs remain unclear, as HP and Humane did not respond to requests for comment. However, the acquisition serves as a reminder of the challenges faced by AI hardware startups and the highly competitive nature of the industry.