According to a report by Reuters, HTC has stopped production at one of its main four factories and is looking to outsource production due to its weakening financial situation. The Wall Street Journal added in a separate report that the Taiwanese firm has already met with several top outsourcing manufacturers including FIH Mobile Ltd., part of Foxconn, about the possibility of contracting out its manufacturing processes.
In response HTC has issued a vehement denial saying “HTC is not shutting down nor does it have plans to sell any of its factory assets.” The statement also said that “HTC has a very strong balance sheet.”
The rumors about one of HTC’s facilities falling into disuse comes from a Reuters reporter who visited an HTC factory and saw a sign on a locked lobby door that read: “Lobby is temporarily closed for use. Thank you for your cooperation.” The loading docks were also closed.
Reuters pursued the matter further and spoke with HTC Chief Marketing Officer Ben Ho, who recently announced the departure of Lorain Wong the vice president and head of global public relations after only four months after she took the job. According to Ho, HTC operates its facilities according to demand. Those familiar with the situation told Reuters that HTC had recently combined two production lines and reduced its potential capacity by about 1 million devices per month. It is thought that HTC previously had the ability to make around 4.5 million devices a month if needed.
HTC’s shares price rose following the reports by Reuters and the WSJ because rationalizing production and outsourcing some aspects of manufacturing will help HTC save money and improve its cash flow.
In a Town Hall meeting with staff on Tuesday, Chief Executive Peter Chou said HTC wanted to double its share of the high-end smartphone market to 15 percent during 2014. When asked about outsourcing Chou said that the company can’t rule out cooperation with other companies as remaining flexible was important. However he underlined that manufacturing was an important part of the company.