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Failing to Win Apple's Display Business, Wintek shuts Down Two Plants and Cuts 7,000 Jobs

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A new report today claims that Taiwanese group Wintek, formerly a major supplier of touchscreens for Apple's iPhone and iPad, has shut down two plants in southern China and axed 7,000 jobs, leaving unpaid suppliers to chase debts of US$37million. While Wintek was the largest supplier of touchscreens for the iPhone 4, Apple switched to a different technology in 2012 for its iPhone 5, eliminating much of Apple's need for Wintek's technology.

 

In 2012 we posted a report titled "Apple's new In-Cell Displays may be Root of Production Problems." Going from the iPhone 4 to the iPhone 5 Apple had tried to change to In-Cell technology but were experiencing production delays in the process. Wintek stated that they were going to have a meeting with Apple in Cupertino as they felt they had a solution. Obviously Apple didn't think much of their solution. Wintek placed a bet that failed after Apple selected a rival touchscreen technology in late 2012.

 

In 2013, Apple opted for film touch panels in its iPads, rather than the glass touch panels made by Wintek and that was the beginning of their downfall.

 

The episode represents a cautionary tale for high-tech manufacturers in southern China who aspire to the coveted ranks of being an official Apple supplier.

 

Jerry Chen from Shenzhen Laibao High-tech, another touchscreen maker, said, such incidents are common in the industry, "although it did come a bit suddenly in Wintek's case." He added that "It mostly has to do with the growing competition and lower margins. Before there used to be two to three companies sharing a single order and now there may be as many as 10." The sector is under fierce competition.

 

The Financial Times stated that armed police surrounded the plants in the city of Dongguan as workers collected their final pay this week, while suppliers demonstrated in front of the factories. For more on this, see the full Financial Times report.

 

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