HTC May Split into Two Companies to Improve Competitive Positions

HTC Halts 20% - 25% of Manufacturing Capacities

by Anton Shilov
10/23/2013 | 11:00 PM

HTC Corp. may split into two companies in a bid to take most advantages of its assets, according to a new report. One of the business units will concentrate on designing of leading-edge smartphones, whereas the other will actually deal with manufacturing for those interested in it. While the plan may sound viable, it may not work.

 

HTC has paused at least one of its four main manufacturing lines, accounting for at least a fifth of total capacity, and is outsourcing production as a sales slump puts pressure on its cash flow, reports Reuters news-agency. According to the report, HTC had combined production from two lines at Taoyuan into one, which would decrease its possible capacity by about 1 million phones per month, out of a total capacity of around 2.5 million at the site and around 4.5 million including manufacturing operations elsewhere.

“Like any manufacturer, we do volume planning to optimize our lines, our manufacturing and production facilities. Whether we are operating those facilities depends on market demand and our own expectations. When you have less demand you work with less facilities to optimize your costs. When you have demand, or bigger growth, you definitely have to activate all these facilities,” said Ben Ho, chief marketing officer of HTC.

Nonetheless, sources familiar with the company’s plans have revealed that HTC plans to sell the manufacturing facilities in Taiwan and China and then focus on product development. Another plan is to split the company into two, one of which will manufacture devices not only for HTC that designs its own devices.

Taiwanese smartphone manufacturer HTC originally gained success by making handsets tailored to the needs of operators and other vendors with brands. With the rise of Google Android platform, HTC started to make its own-brand smartphones and managed to become successful as well. However, due to heavy competition from companies like Apple and Samsung, HTC is now considering to sell its manufacturing facilities, focus on new products and outsource production to Foxconn Electronics, Compal or Wistron, who have much better costs.

HTC did not confirm the reported plans.