Taiwanese mobile phone manufacturer HTC has halted one of its four main manufacturing lines, which makes up around a fifth of the firm's capacity.
Sources with knowledge of the decision told Reuters that the firm is now outsourcing production as a sales slump has put pressure on the company's cash flow.
HTC launched the latest version of its HTC One series earlier this year, but it has struggled to make its mark on rivals Apple and Samsung.
Initially, HTC denied it has closed part of its manufacturing operation, but when contacted by Reuters, Ben Ho, chief marketing officer, said: "Like any manufacturer, we do volume planning to optimise our lines, our manufacturing and production facilities.
"When you have less demand you work with less facilities to optimise your costs. When you have demand, or bigger growth, you definitely have to activate all these facilities."
Sources claim cash flow led to the firm considering selling the out-of-use production lines in China and Taiwan.
Posted by Simon Thomas