Taiwan’s HTC to axe 15 per cent of workforce as gap widens with Chinese rivals Xiaomi, Huawei in smartphone war

PUBLISHED : Monday, 17 August, 2015, 7:00am
UPDATED : Monday, 17 August, 2015, 7:00am

Taiwanese smartphone maker HTC will slash its work force by 15 per cent, or 2,250 people, as it seeks to reduce its operating expenses by just over a third and anticipates a net loss for the third quarter, it said late last week. 

HTC used to be a dominant force among Asian smartphone brands and once accounted for more shipments than any of its global rivals. 

It released the HTC Dream in 2008 as the first commercially available smartphone to use Linux-based Android, before Google snapped up the operating system and developed it to the powerhouse it is today.

Three years later and still on the ascendant, the company only trailed US smartphone market leader Apple by one percentage point, according to technology research company Gartner.

But HTC has not been able to keep pace with cost-cutting Chinese powerhouses like Xiaomi and Huawei amid a squeezed market, and is now looking to streamline its operations and realign its business, it said. 

It suffered a net loss of US$248.6 million in the second quarter, compared to a net profit of US$71.4 million one year earlier.

The company now owns just 2 per cent of the global smartphone market and has long since dropped out of the top 10 brands.

HTC said in a statement that it will rely more on premium models in the future to bolster its revenue, while also diversifying into virtual reality technology and connected, or “smart”, lifestyle products. 

It launched a fitness tracking band in March.

Also last Thursday, Chinese technology giant Lenovo Group announced a similar plan to lay off 3,200 employees, or 5 per cent of its global workforce, as part of a sweeping restructuring plan.

Lenovo's net profit plummeted 51 per cent in its first fiscal quarter, which ended June 30.

Meanwhile, Taipei-listed HTC saw its share price close at NT$52.1 (US$1.62) on Friday, down 59 per cent from one year earlier. Its value has almost halved from 2011.