Makers of touch screen panels fall victim to competition
Closure of two Dongguan mobile screen factories this week highlights tough environment for firms that fall behind rapid technology changes
The boom in demand for touch screen technology has turned sour for hundreds of mainland plants that have failed to keep pace with the fast-changing requirements for smart devices.
Taiwan-based Wintek Corp, which makes liquid crystal displays for use mainly in mobile phones, this week closed two of its mainland factories in Dongguan after dismissing more than 7,000 workers.
"Wintek's problem is it failed to become supplier of the latest generation of iPhone products," said Rick Hsu, Taiwan-based head researcher for electronics at Daiwa Capital Markets.
Orders from technology giant Apple used to be a key business for Wintek, but that ended when the firm failed to catch up with the most advanced technology in the touch panel industry, according to Hsu.
"Wintek had to close some factories because they didn't move successfully towards the high-end market in time, while in the low-end market the competition is intense with too many mainland competitors," he said, adding that small-to-medium-sized firms will find it hard to survive unless they manage to keep up with advanced technology.
"The pricing of domestic smart device brands, including Xiaomi, Coolpad, Lenovo and so on, are very budget-friendly," he said. "As a result, every one in the food chain is under pressure."