Smartphone giant HTC Corp
martphone giant HTC Corp. will sell off its manufacturing facility in Shanghai and initiate a second wave of layoffs before the end of this year, according to a local report published yesterday.
According to Next Magazine, HTC is shutting down two production lines in Shanghai.
The facility will be sold to a Chinese firm and the terms of the transaction have been confirmed.
HTC set up a 146,667-square-metre factory in the Pudong New Area of Shanghai in 2009 with an initial investment of NT$1.05 billion (US$32.3 million) to cater to the fast-growing smartphone market in China, Next Magazine reported.
HTC said yesterday it would not comment on market rumours or speculations and only stressed its statement made earlier.
Through definitive organisational re-structuring, active execution and efficient governance principles, the new measures will lead to the company's sustainable development and gaining profitability, HTC said.
Under a holistic lean management scheme, HTC aims to cut down operation costs by 35 per cent, part of which entails a 15-per cent global workforce reduction.
Reductions will be carried out until the end of the year, the company said.
HTC chairwoman Cher Wang said 'HTC is a company teeming with innovation. The company has a workforce willing to be creative. The company integrates software and hardware expertise, cutting edge technology and excellent design capacity that leads the world.'
'We are actively pursuing developments in various fields other than the smartphone. We need a highly flexible and energised workforce, to ensure we grasp all opportunities and advantages in the field of a connected smart life.'
The new operation scheme will make sure every department has set clear goals, the right resources and talent so that they may achieve success in the brave new market, Wang said.
Institutional investors express support
Institutional investors in general are positive about HTC's potential manufacturing facility sell-off.
When its capacity utilisation goes down, a plant becomes an idle asset.
Since the asset can still be very costly to operate due to depreciation and other expenses, getting rid of it will be beneficial for companies without the best fundamentals, an institutional investor said.
As enterprises go through re-structuring, besides laying off people, liquidating asset is a good approach to trim down costs, the person remarked.
HTC shares dipped 0.2 per cent to close at NT$49.35 yesterday in Taipei trading. (++++)
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