Shrugging off malaise from the growing computer industry downturn, Quanta Computer (
Quanta Computer chairman Barry Lam (林百里) was quoted by local media as saying new orders from Dell, the world's second largest PC seller, will account for over 50 percent of Quanta's total revenue this year. News of the deal sent the company's stock skyrocketing.
Shares in Quanta Computer surged 6.7 percent to end at NT$104 on the Taiwan Stock Exchange yesterday.
Earlier this year, Quanta forecast sales of 4.5 million notebooks for 2001, up from 2.6 million units last year. The company manufactures notebooks on a contract basis for customers around the world, including Dell, Compaq Computer Corp and Fujitsu Co. The report of sizable new orders from Dell made up the difference between last year's production figures and this year's anticipated volume.
"I think the probability is very high that they can attain these figures [4.5 million notebooks and 50 percent revenue growth]," said Alex Huang, electronics analyst at Dresdner Kleinwort Benson in Taipei.
Huang credited Quanta's strong research and development with its low cost base for helping win the order. Quanta is able to field "hundreds" of design models for customers to choose from and offers extremely low costs in Taiwan for volume production.
It is unclear what products Dell ordered from Quanta, as Dell sells desktop computers, notebooks and servers as well as other computer products. Quanta manufactures all of these products, but company officials could not be reached for comment on the issue.
The new orders make Dell Computer one of the last US firms to outsource the majority of its computer-related production to Taiwan. Lam pointed to the order as further proof of a mantra Taiwanese manufacturers have touted all year -- namely that the full impact of any economic downturn this year will be cushioned by orders from foreign companies seeking to reduce costs.
Lam also said his company would produce between three million and four million mobile phone handsets this year. This would entail the company bolstering production from the current level of around 50,000 handsets per month to over 300,000 per month, according to Frank Lee, analyst at Indosuez W.I. Carr.
"I think [the handsets figure] is a very aggressive target," said Lee. "The true number is probably somewhere in the middle." The only way Quanta could reach such a high level of production this year is if they add new handset customers, Lee said.
A number of local contract manufacturers have moved into mobile phone production as a new growth industry for Taiwan. Together, these firms expect to produce 47 million handsets this year, up from only 10 million last year. Lee called the total production figure a "difficult number to reach," in light of the slowing market for handsets.
"There will be high unit growth but it's not as aggressive as they're saying," said Lee. He set the true production figure closer to 20 million units for the local manufacturers.
Meanwhile, in response to market rumors suggesting that Toshiba has cancelled orders placed to Quanta, the chairman reportedly said, "We have never had any orders from Toshiba; therefore, how could a cancellation take place?" He does believe, however, that Quanta will add one or two Japanese customers this year.
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