For the first time this quarter HTC has outsourced some smartphone production to other manufacturers in a bid to return to profitability. The company has been posting losses every quarter since last year and has been trying to control its costs. By outsourcing production of its mid-range devices not only can the company save some money but it may also be able to better pursue customers in emerging markets.
HTC certainly hasn’t taken a unique step. Following the top level management change at BlackBerry, one of the first things at CEO John Chen did after taking the reins was outsource production of low-end and mid-range models to Foxconn. Both companies have signed a five year deal under which Foxconn will assume responsibilities for the aforementioned devices. Thus leaving BlackBerry to focus on high-end devices.
People familiar with the matter tell the Wall Street Journal that HTC has selected Taiwan-based Compal Electronics and China’s Wingtech Group for production of at least three new models in the Desire series. This is symbolic move for HTC which has traditionally developed all of its phones.
The company’s CFO Chialin Chang had previously hinted at the possibility of HTC using outside manufacturers, but it doesn’t seem to have any plans of outsourcing its flagship, the HTC One. Though even if this move saves HTC some costs it won’t be pivotal in turning its fortunes around. The company still has to find a way to sell more of its devices, both high-end and mid-range, if it really wants to get out of the slump.
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