HTC scales back production amid cash flow problems

Taiwanese smartphone maker HTC has halted 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, according to sources with direct knowledge of the situation.

A reporter who visited an HTC factory at the company’s former headquarters in Taoyuan, about an hour’s drive from Taipei, saw loading docks shuttered and a sign on a locked lobby door that read: “Lobby is temporarily closed for use. Thank you for your co-operation.”

HTC launched its latest version of the flagship One series handsets this year but has struggled to gain traction in a market dominated by larger rivals Apple and Samsung Electronics.

The company, whose woes have been exacerbated by supply chain constraints and internal turmoil, reported its first ever quarterly loss this month and its cash flow from operations dropped to a negative US$707.27 million as of the end of June.

Despite lacklustre sales, HTC devices usually receive rave reviews, and it has in recent months expanded its range to include smaller and larger models of the One phone and hinted at further products, including a tablet and a wearable device.

HTC initially denied it was shutting down any production, in Taiwan or elsewhere, and declined to comment on whether it was in discussions to outsource production.