JW Insights: Chinese smartphone supply chain companies cut workforce, but some add R&D personnel
Chinese article by 孙俐俐
English Editor 张未名
05-06 16:13

By Kate Yuan

(JW Insights) May 5 -- The entire mobile phone supply chain in China was in a trough with job cuts occurring across the entire industry. But some companies maintained high R&D investment during the industry downturn and achieved positive results, according to a JW Insights report on April 28.

The downturn of smartphone industry started last year, with a decrease in orders and gross profit margins, along with a low capacity utilization rate.

Additionally, some manufacturers have reduced spending in mature areas and selectively downsized certain functional departments while preparing emergency plans.

It was reported that Xiaomi was carrying out large-scale layoffs, involving multiple departments at the end of last year. Xiaomi's full-time employees decreased by 884 compared with the same period last year, but the number of R&D personnel increased by 1579 in 2022.

JW Insights’ research on the personnel changes of Chinese listed mobile phone companies found that these companies all showed decrease in the number of employees last year including Furi Electronics (福日电子), TXD Technology (同兴达), Everwin Precision (长盈精密), Q Tech (丘钛科技), Wufang Photoelectric (五方光电), and Truly International (信利国际). Among them, TXD Technology, Everwin Precision, Q Tech, and Truly International reduced their workforce by more than a thousand people compared to the previous year.

Q Tech said that the significant decrease in the number of employees was mainly due to the group's automation and digital upgrades, which led to a decrease in labor demand. The decline in sales of camera modules and fingerprint identification modules also lowered the demand for workforce.

Crystal-Optech (水晶光电) saw R&D personnel increase by 447 from the previous year, although its employees also decreased. In addition, employees of BOE, Lante Optics (蓝特光学) and Sunny Optical (舜宇光学) increased significantly in 2022, by 8,882, 357, and 1,946, respectively.

It is speculated that the significant increase in production personnel at BOE last year may be related to Apple projects. People familiar with Lante Optics said that the company has a "close relationship" with Apple, and Apple may be the driving force behind the growth of its technical and R&D personnel.

Whether to serve large clients or develop new businesses, the personnel changes behind this are not just a matter of numbers. For example, the increase in production line employees is generally due to increased orders, while the increase in R&D personnel is more significant, with crucial value for in future development.

BOE's R&D personnel increased by 1,367 in 2022 over the previous year, while Crystal-Optech's R&D staff increased by 447, JW Insights found.

BOE's 2022 annual report mentioned building a "1+4+N+ecosystem chain" business development framework. As for R&D investment, it will not only focus on mobile phones, wearables, laptops, automotive products, and ICs, but also on self-owned brands and devices.

Crystal-Optech's R&D investment is directed towards projects including fingerprint recognition side buttons, optical sensing modules, DOE, automotive diffusers, automotive radar covers, AR-HUD, W-HUD, and AR/VR optical modules.

Although the high R&D investment has had a certain impact on their expenses, which in turn has affected the performance of the current net profit, these investments may bring them a stronger source of growth and growth momentum in the future, the JW Insights report said.

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