HTC plans layoffs as part of efforts to optimize operations

In a statement, HTC confirmed market speculation about the layoffs, but did not disclose details of the number of employees who will be affected by the plan, or give an exact timeframe for the redundancies. (Shutterstock)

TAIPEI (CNA) — HTC Corp., a Taiwan-based smartphone brand, said Monday that it is planning redundancies in a bid to allow its cellphone and virtual reality (VR) businesses to move forward.

In a statement, HTC confirmed market speculation about the layoffs, but did not disclose details of the number of employees who will be affected by the plan, or give an exact timeframe for the redundancies.

HTC currently has a workforce of more than 3,000. The company said that since the Lunar New Year holiday is coming in January, the affected employees will receive year-end bonuses equivalent to two months of salary, despite the layoffs.

The confirmation came after the smartphone supplier has suffered years of losses at a time when the company is faced with stiff competition in both the high-end and low to mid-range smartphone segments in the global market.

The only time HTC has reported a quarterly profit since the first quarter of 2015 was in the first quarter of 2018, when its bottom line benefited from the sale of its smartphone ODM assets to Google.

In the third quarter of 2019, the company reported a loss for the 16th time in 17 quarters. For the first three quarters of the year, it posted a loss per share of NT$8.55 (US$0.28).

In the first 11 months of the year, HTC’s consolidated sales stood at NT$9.41 billion, down 57.98 percent from a year earlier.

The smartphone brand has also entered the VR business, launching its first VR headset — the Vive- — in 2015 and then follow-up models to secure additional sales and offset the impact from the weakness in its smartphone operations.

Market analysts said the VR operations have only accounted for a small fraction of its revenue, although the numbers have been big enough to give a boost to the company’s overall sales.

HTC said the layoffs are expected to help the company optimize its operations, as it is making great efforts in innovations to improve the product mix and boost its competitiveness.

The company said it has set an innovation benchmark for mobile communications technology with the launch of its second Blockchain, the HTC Exodus 1 smartphone model for cryptocurrency transactions.

The company added that it has also laid a good foundation in VR technology development, noting that it has unveiled one of the latest VR headsets — the Vive Cosmos — which runs a new platform called the “Vive Reality System” that uses hand controllers that do not require external sensors placed around the room.

In recent years, HTC has carried out several layoffs, the most prominent of which involved 1,500 employees, or about 25 percent of its workforce in manufacturing operations, in July 2018, while in 2015, the company laid off 2,250 employees, or about 15 percent of its workforce at that time.

Before the confirmation, the layoff speculation sparked buying in shares of HTC, which closed up 10 percent, the maximum daily increase, to close at NT$39.10 on the Taiwan Stock Exchange Monday.