HTC denies Shanghai unit sale reports

A visitor tries out a pair of Vive Virtual Reality goggles, produced by HTC Corp, during the Gamescom 2015 fair in Cologne, Germany, on Aug 5.[Photo/Agencies]

Smartphone giant HTC Corp on Tuesday denied media reports that it was planning to sell its manufacturing facility in Shanghai as part of its efforts to cut costs.

"The Shanghai plant is not for sale," the embattled HTC said. "We have no intentions of selling the plant but layoffs are possible because the cuts are part of a global move," the company said, denying Securities Daily's reports that the company was selling its $32 million smartphone plant in Shanghai to an unnamed Chinese mainland smartphone maker. In addition, the report said the company was planning a second wave of layoffs before the end of this year.

The Shanghai plant, built by HTC in 2010, was a major mobile manufacturing unit on the mainland with peak annual shipments of 2 million units. But the facility had to lay off workers and shut down most of its production lines this year due to dwindling demand, according to a sina.com report.

James Yan, a handset analyst at global research firm International Data Corp, said many local players, including Xiaomi Corp and LeTV Holdings Co Ltd, could be interested in the HTC facility.

"HTC has several product designs that mainland companies are keen on," Yan said. Xiaomi and LeTV, when contacted, refused to comment.

HTC, the world's No 2 smartphone maker by market share four years ago, said its revenue halved from a year ago in the second quarter of this year to NT$33 billion ($1.04 billion), primarily due to sluggish smartphone sales in China and other emerging markets.

The company also found itself displaced from the worlds' top 10 smartphone vendors in the past quarter, according to industry consultancy Gartner Inc. The company, however, did not disclose details about shipments.

Reeling from heavy financial losses, the company intends to shed 15 percent of its global workforce to reduce operating costs. The company has more than 15,000 staff worldwide.

Besides cutting jobs, company co-founder and CEO Cher Wang is trying other means to revive HTC, maker of the world's first Android smartphone.

HTC said on Monday that it will buy back 50 million treasury shares worth more than NT$3 billion in two months to restore investor confidence. The buyback will account for 6 percent of the company's outstanding shares.

Stocks of HTC, traded in Taipei, surged by 9.91 percent on Tuesday to reach NT$44.35.

Yan from IDC said the company will need to focus on premium devices after its current flagship failed to defeat Samsung Electronics Co Ltd's Galaxy series and Apple Inc's iPhone 6/6 Plus.

"It will have very slim chances to win back market share on the Chinese mainland because of stiff competition, but it could have opportunities in other markets," he said.

Smartphone sales in China dipped by 4 percent in the second quarter, the first year-on-year decline since the smartphone era began, Gartner said.

The company said HTC struggled to achieve growth in high-end markets while emerging brands, such as ZTE Corp, Huawei Technologies Co Ltd and India-based Micromax quickly gained ground among price-sensitive buyers.

HTC never sold devices priced below 1,000 yuan on the Chinese market. The bottom-tier price segment has been a happy hunting ground for mainland manufacturers.