TMCnet Feature

In an effort to remain competitive in the smartphone sector, Nokia (News - Alert) is letting go some 4,000 workers and scaling back at three factories as part of a money-saving effort. The struggling company will move phone manufacturing to Asia, according to news reports.

Factories in Komarom, Hungary, Reynosa, Mexico and Salo, Finland will now focus on smartphone “customization” – for customers in Europe and the Americas, according to a Nokia press release. The assembly of devices will be moved to Nokia factories located in Asia, according to the company statement.

Most component suppliers are located in Asia. The Los Angeles Times notes that Apple (News - Alert), HTC and Samsung – which are Nokia’s rivals – already have moved most of their manufacturing to Asia.

In a comment on the move, Neil Mawston, an analyst with Strategy Analytics (News - Alert), told The Associated Press said it "made sense" and was similar to actions by other cell phone makers. "It's an unstoppable trend really. Essentially, labor costs, land costs and other associated costs are so much lower in Asia," Mawston told The AP. "Also, Asia is so much closer to the biggest pool of users now so from a supply and demand side Asia looks a lot more attractive than Europe."

"Shifting device assembly to Asia is targeted at improving our time to market,” Niklas Savander, Nokia executive vice president, Markets, said in the company statement. “By working more closely with our suppliers, we believe that we will be able to introduce innovations into the market more quickly and ultimately be more competitive. We recognize the planned changes are difficult for our employees and we are committed to supporting our personnel and their local communities during the transition."

The layoffs will be phased through this year. Nokia employs 130,000 workers. Nokia said it has let go some 10,500 workers after shifting to Microsoft's Windows Phone OS, and decided to stop using Symbian (News - Alert) software, according to the LA Times.

Nokia reported a $1.38 billion loss during the 4Q of 2011, The LA Times added in an article carried by TMCnet.

In a related matter, Nokia saw less than 30 percent of device market share during 2011, The AP said.