Microsoft’s mobile partner says it will move smartphone assembly to Asia to better compete with rivals like Apple and Google.
Smartphones: Never Too Thin Or Too Organic
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On the heels of a fourth quarter in which it posted an operating loss of $1.25 billion, phone giant Nokia said Wednesday that it plans to cut 4,000 jobs as part of a plan under which it will shift the bulk of its smartphone assembly work from Europe and Mexico to Asia.
Officials at Nokia, which is moving its entire smartphone portfolio to Microsoft's Windows Phone operating system, said the changes mean its assembly operations will be closer to Asian component suppliers, allowing for faster production. Nokia maintains production facilities in China and South Korea.
The affected plants in Komarom, Hungary; Reynosa, Mexico; and Salo, Finland will shift their focus to finishing and customization, Nokia said.
"With the planned changes, our factories at Komarom, Reynosa, and Salo will continue to play an important role serving our smartphone customers," said Nokia executive VP Niklas Savander, in a statement. "This gives us a unique ability to both provide customization and be more responsive to customers' needs."
The job cuts will impact about 2,300 workers in Komarom, 700 in Reynosa, and 1,000 in Salo, according to reports. "We recognize the planned changes are difficult for our employees and we are committed to supporting our personnel and their local communities during this transition," said Savander.
The shakeup at Nokia is part of the fallout from its decision last year to strike a formal alliance with Microsoft and shift virtually the entirety of its smartphone lineup from the Symbian OS to Windows Phone 7 and beyond. Since then, the company has announced more than 15,000 layoffs as it retools its operations to support Windows Phone.
Nokia, under former Microsoft exec Stephen Elop, made the move because it felt Symbian couldn't compete with modern smartphone platforms like Apple's iPhone iOS and Google Android. But the strategy isn't without risk. Windows Phone debuted in late 2010, but it has yet to catch on with consumers in key markets. Its U.S. market share was less than 5% in the fourth quarter, according to Comscore.
Nokia and Microsoft are hoping to change that with the introduction of the well-received Lumia line. The Lumia 710 hit U.S. stores last month, and the higher-end Lumia 800 and Lumia 900 are expected to arrive in the coming weeks.
Nokia depository shares were up 1.27%, to $5.20, in U.S. morning trading.
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