Hangzhou Motorola Cellular Equipment Co Ltd, a joint venture between Motorola Inc and Hangzhou Eastern Communications Co Ltd, is stopping cell phone production after the first quarter of this year, underlining the extended woes of the US communication giant's troubled mobile phone business.
"The cell phone sector will be integrated into production lines in Tianjin Motorola after the first quarter of this year," said Chen Lei, spokesperson, Motorola China.
"Hangzhou Motorola will instead focus on TV set-top-box business as well as broadband and mobile network equipment," he said.
Chen said the company intends to capitalize on Hangzhou Motorola's strength in TV set-top-box manufacture and research and development.
In February 2008, Motorola purchased the TV set-top-box business of two Hangzhou companies - Zhejiang Dahua Digital Technology Co Ltd and Hangzhou ImageSilicon Technology Co Ltd.
Hangzhou Motorola said its annual production of TV set-top-boxes has doubled to 2 million sets from a year ago. It moved its facilities to the Binjiang development zone in Hangzhou on Feb 21 this year.
"The integration of the cell phone production also helps Motorola to lower its costs as the handset industry is better off in Tianjin than Hangzhou," said Zhang Ying, vice-president, Analysys International, a leading advisor for technology, media and telecom industries in China.
"The employees of the cell phone unit in Hangzhou would be transferred to the TV set-top-box unit. We also do not have any plans to cut staff or hire new employees," said a Hangzhou Motorola human resources official.
On Jan 15 this year, Motorola announced plans to lay off 4,000 employees worldwide, the bulk of which would be from its mobile device department.
According to the fourth-quarter financial report, Motorola posted a full year loss of more than US$4.16 billion in 2008. The mobile devices sector contributed to more than half of that loss and eroded the business revenue of enterprise mobility solutions and home & networks mobility.
In the fourth quarter of 2008, cell phone sales plunged by 53 percent from a year earlier to 19.2 million sets. The business revenue of Motorola mobile devices department dropped 51 percent to US$2.35 billion with a quarterly loss of US$595 million.
During the quarter, Motorola said its cell phone market share worldwide was 6.5 percent.
(China Daily March 4, 2009)
