VTech was founded in Hong Kong in October 1976 by two local entrepreneurs, Allan Wong and Stephen Leung. When the first single-chip microprocessor "Intel 4004" became available in the early 1970s, the company saw the potential it offered for portable consumer electronics products. Wong & Leung set up a small factory in To Kwa Wan, with a US$40,000 investment and a staff of 40 people. In the first year, turnover was less than US$1 million.
VTech initially focused on developing video games. In 1977, the company created its first home TV game console, a version of Pong. Since only consumers in North America and Europe could afford such items, the company targeted primarily these markets.
The United Kingdom was chosen as the first market for Pong, as Hong Kong and the UK used the same standard for television systems. In 1978, the founders introduced LED games they had developed to buyers from RadioShack in the US, which were sold under the RadioShack brand.
VTech then began to build its own brand. VTech unveiled its first electronic learning product (ELP) called "Lesson One” at the New York Toy Fair in February 1980. It taught children basic spelling and maths. An exclusive version under the name "Computron” was offered to Sears, with the product being prominently advertised by Sears in its catalogue which was a popular shopping guide.
VTech then branched out into personal computers, including a series of IBM compatible PCs beginning in 1983 and Apple II compatible computers beginning in 1985, including a model called Laser 128. VTech exited the personal computer market in 1997 due to keen competition.