HTC facing supply chain troubles

htcTAIPEI: HTC is facing supply constraints on its latest smartphone, sources familiar with the matter said, piling pressure on already disappointing sales and increasing the likelihood the firm will post its first net loss this quarter.

The problems with the HTC One Mini, launched in mid-July to generally positive reviews, come partly from a casing shortage arising from design difficulties that are crimping production rates, one of the sources said.

The casing troubles come hot on the heels of shortages associated with the flagship HTC One model’s camera module, indicating the Taiwanese company is still struggling to overcome supply chain difficulties which delayed the One’s full launch and contributed to a record low first-quarter net profit.

Another source said consumer and telecom demand for the One Mini could not be met at the moment, even though analysts estimate that the company plans to ship only around 200,000 of the devices each month.

HTC did not reply to an emailed request for comment. The sources declined to be identified because they were not authorised to speak on behalf of HTC.

The company said in June that third-quarter revenue could fall as much as 30% from the previous three months, and warned of a first ever operating loss in the third quarter.

Analysts expect HTC will not be able to meet guidance after its sales slid 37% in July and 45% in August, in the face of slowing growth in the high-end smartphone market and strong competition from makers of low-cost handsets.

HTC is forecast to post a net loss of T$192 million ($6.50 million) in the third quarter, according to 21 analysts polled by Thomson Reuters. The company will report the preliminary results in early October.

Rocked by slumping sales, internal feuding, executive exits and a smartphone segment that is close to saturation, HTC has seen its market share slump to below 5% from around a quarter five years ago.

HTC shares edged up 0.72% on Tuesday, versus a flat broader market.