TAIPEI -- BenQ will move its Taiwan-based handset production to China and possibly sell its cellphone manufacturing plants in Europe as part of cost-cutting measures designed to return the ODM to profitability.

BenQ Mobile, the firm's handset business, will be made a standalone entity, while its contract assembly work will be spun off and renamed, according to various news reports.

The move to China will affect less than 100 employees and 10% of the company's output, according to published reports. The Taiwan plant operated five lines for cellphones production. A handset line in Mexico is also due to be shut down by the end of the year, a BenQ spokesman reportedly told Manager Magazin, a German magazine.

The plans are drawing comparisons to PC vendor Acer, BenQ's former parent, which split into two units and spun off its manufacturing business in 2000, thus launching BenQ.

BenQ has thus far been unable to turnaround the former Siemens handset unit, which it took over last year. The company lost $228 million during the first half.

However, BenQ is denying a report from Manager Magazin which claimed the company would outsource some production to Foxconn.

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