Xiaomi backed e-sport gaming phone brand Black Shark has undergone massive layoffs, as the business continue to struggle after it failed to get funds from Tencent Holdings in an acquisition deal.
Black Shark has laid off over 100 employee since August 2022, which is equal to nearly 80% of its workforce.
Black Shark told affected employee via an internal letter that it has suffered tremendous operational difficulties and has failed to pay severance under this extreme condition.
“We will continue to find solution to figure out funding problem and pay the rest of pay the remainder of severance payments owed to employees as soon as possible,” Blackshark said in the letter.
Some of the laid-off workers have expressed their anger and disappointment on China’s microblogging site Weibo. A Tuesday post by Black Shark CEO Luo Yuzhou has been flooded with angry comments asking for full payment of the severance package
Tencent walked away from Black Shark’s acquisition deal after reviewing the company’s structure and finances, saying that “we failed to get approval from authorities for a deal.”
Tencent began talks with the phone brand in January 2022 for an acquisition deal, with the aim of having Black Shark produce virtual reality (VR) headsets for metaverse-related content.
Founded in 2017, Black Shark focus on researching and developing mobile phone dedicated to e-sports gaming. The company sunk into financial trouble and liquidity crisis after venturing into virtual reality. At the meantime, smartphone shipments in China dropped significant amid a slowdown in demand for smartphone from Chinese consumers, whch made Black Shark’s liquidity problem even worse.
Smartphone shipments in China were down 23.6 per cent compared to the same period in the previous year.