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June 28, 2017

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HTC confirms that it has been outsourcing smartphone production

TAIPEI -- HTC Corp. (宏達電) confirmed yesterday that some of its smartphones are being made by contract manufacturers, as was reported in the Wall Street Journal the day before.

The Taiwanese company said its outsourcing decision was based on gaining greater flexibility in its operational strategy rather than on cost reduction considerations.

"We have been outsourcing production. We think that once our assembly partners attain a manufacturing standard that meets our requirements, we can let them produce (our smartphones)," HTC Chief Financial Officer Chang Chia-lin (張嘉臨) said at a media briefing after an earnings report by the company via conference call.

"The outsourced products have been received well by consumers," Chang said but declined to identify the products or name the assemblers.

He disclosed, however, that the phones in HTC's new Desire 8 series, promoted as "high cost-to-performance" products, are still being made at the company's factories.

Chang said HTC's outsourcing volume was not as high as 50 percent of its overall shipments, as reported in the Wall Street Journal, although he could not immediately give an estimate of the actual figure.

According to The Wall Street Journal report, Taiwan-based Compal Electronics Inc. and China's Wingtech Group have been assembling at least three of HTC's new Desire mid-tier phones, starting in spring this year.

Citing people familiar with the matter, the international daily said Wingtech has been manufacturing HTC's cheapest phone to date, the Desire 210, which was launched in India last month at 8,700 rupees (US$145). The Chinese company also produces the Desire 616 that is powered by an octa-core processor from MediaTek Inc., the report said.

Compal has been making some of HTC's other Desire phones, starting in the second quarter of the year, the paper reported.

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