Thu, Mar 21, 2002 - Page 17 News List

Fujitsu to hike its outsourcing orders

OEM MANUFACTURING The Japanese giant plans to spend NT$30 billion on PCs, servers, mobile phones and invest in a plant that will make plasma display panels

By Dan Nystedt  /  STAFF REPORTER

Fujitsu Ltd, the Japanese electronics giant, plans to purchase NT$30 billion (US$857 million) in personal computers, servers, mobile phones and other products from Taiwan this year as it seeks new, low cost outsourcing partners, executives from the firm said yesterday in Taipei.

The company also plans to invest an additional NT$15 billion (US$43 million) as well as transfer technology for a factory in Taiwan that will make plasma display panels with partners Hitachi Ltd, another Japanese firm, and Taiwan's Formosa Plastics Corp (台塑) and AU Optronics Corp (友達光電).

Plasma display panels are used in wide-screen plasma display television sets.

The firms are considering Tainan and Mailiao as possible locations for the plant, according to Tetsuro Shimoyama, director of business promotion at Fujitsu Taiwan Ltd.

The investment plan came as a relief to government officials here, who are scurrying to shore up confidence in local manufacturing after recent political battles over whether or not to allow semiconductor firms to build plants in China.

"We held this press conference to show that Taiwan is still very competitive," said Shih Yen-hsiang (施顏祥), head of the Industrial Development Bureau under the Ministry of Economic Affairs.

"We are quick to market and our costs are very reasonable."

Foreign multinationals purchased US$37 billion's worth of information technology products from Taiwan last year.

US companies accounted for the bulk of those purchases, or US$27.97 billion, while Japanese firms spent US$4.41 billion, a 22.2 percent increase over the previous year, according to the ministry.

For Fujitsu, the venture into Taiwan is about building a new supply chain.

The firm plans to return next month to interview more than 300 local companies from which to procure 207 different IT products.

"Fujitsu plans to make Taiwan our most important outsourcing center. Quality is most important, and the quality of products made in Taiwan is excellent. ... We also require the very lowest costs. If we don't keep costs down, consumers won't buy our products," Shimoyama said.

Fujitsu farms out around 20 percent of its production, whereas US computer giant Compaq has nearly 100 percent of its products made by other firms, according to Henry Wang (王漢寧), electronics industry analyst at EnTrust Securities Co (永昌證券).

The only factor which could derail further outsourcing, Wang said, would be a further depreciation of the Japanese yen.

As yen declines in value, purchasing from Japanese companies becomes more attractive.

Fujitsu executives refused to divulge how much money the firm spent in Taiwan last year, but analysts placed the figure at around NT$22.8 billion (US$650 million).

Fujitsu currently works with Quanta Computer Inc (廣達電腦), Compal Electronics Inc (仁寶電腦) and Wistron Corp (緯創資通), the nation's top three makers of notebook computers.

Fujitsu also works with Chi Mei Electronics Corp (奇美電子) and a number of other companies in TFT-LCD panel components for computer parts and accessories.

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