HTC scaling back production lines?

Despite widespread critical acclaim and the most successful smartphone launch in the company’s history, rumors are beginning to flare that all is not well with the HTC One. According to Reuters, HTC has shuttered at least one of the four manufacturing lines responsible for producing the HTC One—a shutdown that will reportedly reduce total capacity by at least one fifth.    

Reuters reports that loading docks at an HTC plant near Taipei have been closed and a sign placed over the lobby door reading “Lobby is temporarily closed for use. Thank you for your cooperation.” The news comes on the heels of HTC’s first-ever Q3 loss; the company wrote down $101.2 million on $1.6 billion in revenue. Meanwhile, the Wall Street Journal is reporting the company is already in the process of meeting with several manufacturers with the intention of outsourcing production of the HTC One. 

For its part, HTC quickly issued a response to Engadget stating, “HTC is not shutting down nor does it have plans to sell any of its factory assets. HTC has a very strong balance sheet and will provide the latest financials in our upcoming earnings call to investors and the broader community.”

Still, Reuters pressed for comment regarding the partially shuttered factory its reporter observed outside Taipei. While HTC’s chief marketing officer Ben Ho refused to address the facility directly, he made the following statement regarding the company’s production pipeline in a phone interview:

"Like any manufacturer, we do volume planning to optimize our lines, our manufacturing and production facilities. Whether we are operating those facilities depends on market demand and our own expectations. When you have less demand you work with less facilities to optimize your costs. When you have demand, or bigger growth, you definitely have to activate all these facilities."

Reading between the lines, it seems HTC is more or less confirming that demand for the HTC One is dropping, but it’s unclear still how the company intends to react. Many industry analysts have suggested the company will split its design and manufacturing arms to more closely resemble Apple, which designs products in-house but outsources manufacturing to companies like Samsung. As HTC continues to position itself as a premium brand with an eye toward entering the tablet and wearable tech markets, that model may well prove to be a better fit.