Elitegroup takes battle to China

An Elitegroup Computer Systems Co (精英電腦) official said yesterday that the company's notebook computer business will this year surpass that of its primary product, computer motherboards, as sales in China continue to strengthen.

"Our desktop-notebook is very popular," said Chen Ming-chun (陳明村), vice president and spokesman of Elitegroup. "It's portable, it's low priced and it's overtaking the desktop market. We expect notebook sales to overtake our motherboard business this year."

Sales in China, combined with a new contract to produce Apple Computer Inc's popular iMac, are helping Elitegroup become a contender in the notebook contract manufacturing business, which has long been dominated by Taiwanese powerhouses Quanta Computer Inc (廣達電腦) and Compal Electronics Inc (仁寶電腦), Chen said.

Elitegroup expects to sell over 1.1 million notebook PCs this year.

Earlier this year, the company unveiled a notebook computer made with parts normally used in desktops, and without a battery -- which reduced the price of each model by as much as 20 percent, according to analysts. The result was a space-saving, portable computer that simply needed to be plugged in.

According to Chen, the battery-free device has been very popular in China, where many people live in small apartments.

Analysts credit the concept computer with a rise in sales of no-name notebook PCs spotted by analysts at Dataquest. The market research firm reported yesterday that the notebook segment grew 6.1 percent year-on-year in the first half of this year, led by sales of no-name notebooks, which grew by 7 percent. Sales of such notebooks make up more of the market than sales by market leader Dell Computer Corp, Hewlett-Packard Co and Toshiba Corp combined.

Worldwide mobile PC shipments totaled 6.9 million units in the second quarter, up 6.1 percent from the same period last year.

"Elitegroup had very strong sales during the second quarter in China with their `DeskNote' PC," said James Huang (黃建銘), analyst at SinoPac Securities Corp (建華證券) in Taipei.

Elitegroup produces its notebooks in China, lowering costs by about 5 percent when compared to similar products made in Taiwan, Chen said.

Profits in the notebook-computer business have been hard to come by this year. Dell and HP have kept prices low in an effort to attract consumers.

"Market share is the problem. Our customers are asking us to lower our prices so they can keep sales up, and we are pressuring our [component] suppliers to lower their prices as well," said Chang Chih-ming (張志銘), a spokesman for Compal Electronics, the second-largest notebook maker in Taiwan by volume. He said his company will produce around 4 million notebook PCs this year.

Combined with Quanta Computer's estimated 5 million notebooks, the two companies will account for more than half of the notebook computers made in Taiwan. Another dozen Taiwanese companies are battling for orders as well.

Taiwan will account for well over half of the notebook computers made worldwide this year, the Market Intelligence Center reported. The nation will produce around 18.1 million notebook PCs -- 28 percent more than last year -- at a value of US$14 billion, 14.8 percent more than last year, according to the center's figures.