HTC Corp (TPE:2498) has ceased one of its four key manufacturing facilities that contributes around fifth of the total capacity, and is looking forward to outsource production due to increasing pressure on its cash flow, says a report from Reuters citing sources.
As noted by the Reuters source, who visited one of the HTC’s factory in Taoyuan, loading docks were closed and there was a sign on a locked lobby door reading, “Lobby is temporarily closed for use. Thank you for your cooperation.”
HTC denies reducing production
However, the smartphone company declines that it is scaling back its production in Taiwan or elsewhere, and did not comment if it was in talks to outsource its production.
“HTC has a very strong balance sheet and will provide the latest financials in our upcoming earnings call to investors and the broader community,” HTC told in an emailed response to Reuters.
Chief marketing officer (CMO) of HTC Corp, Ben Ho said that like any other manufacturer the company also engages in volume planning to optimize the lines, manufacturing and production facilities.
CMO, further, said that operating the production plants depends upon the market demand and company’s expectations. Ben noted that when demand is less then operation is continued in few facilities to adjust the cost while at a time when the demand is high, all facilities are activated.
According to Reuters, HTC Corp has pooled the production of two facilities at Taoyuan into one, which will bring down the potential capacity of the company by around 1 million phones per month out of a total capacity of approximately 2.5 million at the site, and around 4.5 million including operations elsewhere.
Struggling all round
The Taiwanese phone maker’s latest launch was HTC One series handsets, which could not get popular with the consumers in the wake of severe competition from the likes of Apple and Samsung Electronics.
Further, in June, HTC Corp posted first ever loss, and cash flow from operations declined to a negative $707.27 million due to hurdles like supply chain issues and internal chaos.
HTC phones have not been a startling hit in the market when it comes to unit sales, but the phones have always been appreciated for their features and hardware. Excited by the reviews, HTC decided to launch mini version of HTC One phones, and is also indicating plans to make wearable devices, as well as tablets.