HTC is completing construction of a manufacturing plant in northern Taiwan by early next year, hinting at its plans for future growth in the competitive smartphone market.
The company's factory in the city of Taoyuan may produce as many as 40 million phones a year when operational, according to website Digitimes. With HTC likely ending 2011 with 48 million handsets shipped, the additional plant is expected to help the Taiwan-based phone maker keep pace as its market position potentially strengthens.
News of the plant's near-completion follows yesterday's Canalys report ranking HTC as top smartphone maker in the U.S., based on record third-quarter handset shipments. HTC has pulled ahead in its heated competition with rival Apple, at least for the time being.
However the company's banner third quarter also reflects three months without a new iPhone, which may have driven some customers to migrate to HTC's Android devices. Skyrocketing iPhone 4S sales may swing the pendulum back toward Apple in coming months.
In the meantime, HTC appears to be preparing to ramp up smartphone supply. Building another factory is consistent with HTC's strategy of keeping hardware manufacturing in-house. HTC CFO Winston Yung has described internal production as an advantage for the company, since it allows the handset maker to better control hardware costs and keep a tight rein on its supply chain.
This attitude is in sharp contrast to rival smartphone makers such as Apple and Nokia, which outsource manufacturing to contractors, possibly losing some control over their supply chains in the process.
Supply issues may soon plague Apple in the midst of high demand for the iPhone 4S. Best Buy stores are currently sold out of the device, and customers are expected to wait anywhere from two weeks to nearly a month for a new iPhone from an Apple Store or carrier retail location.
HTC may avoid similar problems as its Taoyuan plant, which, when fully functional, may give the company extra breathing room as it pushes new Android models to market.
The company has softened its fourth-quarter outlook, citing uncertainty around the launch of new phone models and the global economy. This is likely a smart outlook for the now-leading handset maker, but if Apple fails to beef up supply of its popular smartphone to meet customer demand over the holiday season, HTC may exceed expectations.
If inadequate iPhone production hinders Apple's end-of-year sales, HTC may put itself in a position to widen its lead and put its new manufacturing plant to full use next year.
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