Flexible display maker Royole Corporation started a round of layoffs on Wednesday, according to a report by Chinese media outlet LatePost. This is the first round of large-scale layoffs at the company since it fell into a capital shortage crisis.
Royole was established in 2012 and its valuation once reached as high as 50 billion yuan ($743 million). Its investors include Shenzhen Capital Group Co., Ltd., IDG Capital and Shanghai Pudong Development Bank. Its core products include flexible screens for corporate customers and foldable smartphones for individual consumers.
Royole’s human resources department began to inform some employees of the layoff decision on Wednesday. All employees who received the notice have been asked to choose one of several compensation plans before this Friday. One is the basic salary multiplied by their working years, which will be offered within six months. The other is 50% compensation which will be provided at the end of the month. Employees can also choose to stay on the job, but they must take a break from work until at least September of this year, during which time the company will pay them China’s monthly minimum wage of 2,360 yuan.
An on-the-job employee told LatePost that employees in marketing, sales, solution and product development platform, intelligent mobile terminal division and other departments have received notices. The proportion of layoffs in various departments is not clear, but the employee said that only a few senior employees who have worked at Royole for more than four years have not received the layoff notice.
On the contrary, Royole decided to give employees in its Advanced Technology R&D and Production department a salary increase. This division is mainly responsible for the R&D and production of flexible screens.
In April of 2021, Royole fell into financial difficulties and began to default on wages, but it never started large-scale layoffs. In December of last year, in order to retain employees, Royole signed an option agreement with on-the-job employees, and the newly-issued option is equivalent to two months’ salary. It also promised that if employees can continue to work at the company until the end of May this year, the company will buy back this option, but if they leave early, the option will be invalid. Royole started to lay off employees before the option was cashed, which was considered to be a move to avoid paying the cost of option repurchases.