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HTC now outsources some of its phone production, but One M8 is still made in-house

HTC is already outsourcing the production of several Desire models, according to people familiar with the matter, though the HTC One (M8) and Desire 816 are still made in house.
May 5, 2014
HTC Desire 816 aa 6

As a company that started life as a contract manufacturer for other companies, HTC has long prided itself with the fact that it makes all of its products in-house, in contrast with how other phone makers are outsourcing their production to specialized companies in China and Taiwan. But that’s no longer the case.

Following rumors that surfaced in September of HTC scaling down its production facilities to cut costs, the Wall Street Journal reports that HTC is already outsourcing the production of several Desire models. According to people familiar with the matter, China-based Wingtech Group is making the mid-range Desire 616 and the entry-level Desire 210, both primarily targeted to the Chinese market. Compal Electronics, whose clients include HP, Dell, Acer, and many other companies, is reportedly manufacturing another phone in the Desire range.

However, according to the WSJ’ sources, HTC is still manufacturing in-house the high-profile One (M8), as well as the Desire 816. This should appease some fans worried about a possible drop in build quality due to externalization.

Back when the rumors about outsourcing first emerged, the stock market reacted positively, as handing production over to an outside specialist is a way to reduce production costs. While HTC is an experienced and accomplished hardware maker, it can’t really compete with manufacturers that optimize their entire business for the smallest possible cost.

Will this move have a real, positive effect on HTC’s fortunes? At least in theory, it should have, even if the bulk of the production is still handled in-house. But HTC has arguably bigger problems, including its largely ineffective marketing. The company’s leadership insisted that marketing will be more than an afterthought in 2014; among other measures, HTC hired former Samsung marketing boss Paul Golden as an advisor last month.

In related news, HTC is expected to report a return to profit, after two quarters in the red. The company will release guidance for the current quarter tomorrow.