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| HTC: Alleges trade secrets were leaked by employees. Photo: Bloomberg |
HTC employees have been arrested and detained by Taiwan authorities after the company alleged some of its trade secrets were leaked.
Two product design executives were detained, said Huang Mou-hsin, deputy chief prosecutor at the Taipei District Prosecutor's Office. A director and another senior manager in the design and research-and-development divisions were questioned and released on bail. A fifth person working outside the company is also a suspect, said Huang, who declined to comment on the person's role.
HTC, which peaked in 2011, has plunged 88 per cent since then as it lost market share in smartphones to Samsung and Apple. The Taoyuan City, Taiwan-based company has revamped its marketing strategy and shuffled executives to rebuild the brand after its global ranking in smartphones fell to ninth.
"We believe the investigation and detention of HTC's key R&D executives will have damaging impact on its new model roll-out in the next six months," KGI Securities analyst Richard Ko said in report to clients.
HTC, the first maker of phones using software from Google, said its operations aren't affected and its fourth quarter products are on schedule.
The company filed complaints to the Ministry of Justice's Investigation Bureau last month, accusing employees of leaking commercial secrets and using fake receipts to seek reimbursement, Huang said on August 31.
Investigators searched HTC offices and the employees' homes on August 30, according to Huang.
The company didn't specify what secrets were involved in the alleged breach.
"Protecting the company's proprietary and intellectual properties, privacy and security is a core fundamental responsibility of every employee," HTC said in a statement on its website. "The company expects employees to observe and practice the highest levels of integrity and ethics."
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