If you’ve taken a few economics courses, you know all about how cost curves work. I won’t get down to the nitty gritty, because, after all, this isn’t an economics site. All you really have to know is that as production output shrinks, the cost to produce goods gets higher per unit.
As you probably know by now, HTC isn’t selling too many phones these days. Because of this, they have to manufacture less phones so they don’t end up with a surplus. However, if they were to produce less devices at their current factories, the costs for producing these devices per unit increases too much for the company to make a worthwhile profit.
It seems like the only option now is to outsource— which is exactly what they’re about to do.
According to the Wall Street Journal, the company is currently in talks with contract manufacturers to outsource smartphone production: FIH Mobile Ltd., a unit of contract manufacturer Foxconn, and Wistron Corp.
For the first time in a long time, I’ll go ahead and applaud HTC for being a bit more realistic about their future outlook.
It isn’t a power-move that’s going to put them at the top of their game again, but it’s certainly a move which will keep them away from bankruptcy, at least for the time being.
Source: Wall Street Journal