Hardware designer and ex-Valve employee Jeri Ellsworth came out on a Twitch vidcast for an interview, talking about her getting fired from Valve, among other things. Her statements heavily imply that Valve may have already axed it's hardware division.
However, Jeri had more words to say about Valve itself, and raises serious questions about the company's claims of a 'flat' leadership model. Based on her experience with the company, she suspects it has a deep management structure and compares it to high school.
Jeri's initial experience with the company was positive, as she got hired to do hardware and worked with a nuclear five-person team on several hardware projects. She later found that it was difficult to expand her team, as superiors would reject prospective hires for not matching the company's culture. She ultimately suspects some coworkers found her abrasive, although she also made friends in the company.
The day she was fired, she recounts receiving no advance word of Valve's plans and facing Gabe Newell himself, with a lawyer in the same room. Jeri credits Gabe for allowing her to take her projects with her, and that she has spun off into her own company, Technical Illusions, with the same five person team.
Jeri points out her five person team should have had a hundred or so members. Based on the knowledge that Jeri worked on hardware, and took her hardware projects with her, it sounds like Valve has shut down their hardware division.There is no publicly available information if Valve has other hardware teams or division still active, and they have yet to release a statement in response.
Valve confirmed last year they had intentions to make wearable technology. Today, Jeri Ellsworth's company is developing Cast AR glasses, which utilizes stereoscopic 3D, augmented reality, and head tracking.