Local touchpanel maker J Touch Corp (介面光電) yesterday said that it has temporarily shut down a factory in China as it attempts to cope with a drastic decline in orders amid sluggish seasonal demand this quarter.
The company also said that it plans to sell the Chinese assets to cut costs, which is part of a broader plan to turn around the company.
J Touch’s comments came on the back of reports that its Chinese operation in Hunan Province is facing a cash crunch and has delayed paying most workers their salaries in November and last month.
The company dismissed reports that more than 1,000 Chinese workers besieged the Hunan factory in protest of a sudden shutdown and a delay in remuneration.
“We have sent company representatives to communicate with our workers and we have received positive feedback from them. Those reports are false,” company president Arthur Hsu (許暉東) told a media briefing yesterday.
The company is negotiating with the Bank of China (中國銀行) to roll over a bank loan of US$12.61 million to pay wages, Hsu said.
“The closure of the Hunan factory will not have any impact on the company’s business as its Taiwanese factories’ capacities will fully satisfy customers’ orders. But, the company is evaluating the financial impact,” Hsu said.
J Touch had accumulated NT$1.44 billion (US$43.57 million) in losses as of last month, Hsu said. That represents losses of NT$10.22 per share.
The production at the Hunan factory is expected to resume at the end of next month, the company said.
However, J Touch is seeking to sell the Chinese factory to ease its financial burden, Hsu said.
J Touch is also allocating more resources to produce better-margin products, such as Metal Mesh touchpanels and touchpanels used in industrial computers, while cutting production of money-losing touchpanels for consumer electronics, Hsu said.
On Monday, J Touch shareholders approved a 44 percent share reduction plan in a bid to improve the company’s financial structure.
After the reduction, J Touch would have NT$794 million in share capital, compared with NT$1.41 billion now.
To reduce costs, the company has slashed its Taiwanese workforce by 70 percent and its Chinese workforce by 50 percent, the Economic Daily News reported on Tuesday.
J Touch shares tumbled 9.9 percent to NT$4.39 in Taipei trading yesterday.
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