Tue, Apr 01, 2003 - Page 10 News List

Asustek may buy notebook PC plant

COMPUTERS The company, which makes Apple Computer's iBook model, is out to purchase a manufacturing facility from Elitegroup Computer in an expansion effort

By Bill Heaney  /  STAFF REPORTER

Asustek Computer Inc (華碩電腦) said it plans to buy a notebook computer manufacturing plant from rival Elitegroup Computer Systems Co (精英電腦) to expand notebook computer making capacity, a company official said yesterday.

"We plan to buy Elitegroup's factory in Chungli for over NT$1 billion before the end of June," Asustek's spokesperson David Chang (張偉明) told the Taipei Times yesterday. "Our future plan is to manufacture our own brand of notebooks there."

The sale has to be approved at the Elitegroup investors' conference in mid-June before it can be finalized, Chang said.

Having seen shipments of its notebooks rocket in the past two years, Asustek's current manufacturing facilities can't pump out new products quickly enough. Last year Asustek shipped 800,000 notebooks, more than double the previous year's figure of 380,000, Chang said. The company plans to ship 1.6 million this year.

"Asustek needs to increase production and this purchase will help in its capacity expansion," said Jonathan Chen (陳進盛), an analyst at SinoPac Securities Corp (建華證券). "Meanwhile, Elitegroup will shift production to China."

Elitegroup makes Apple Computer Inc's iBook model at the Chungli plant, its only remaining factory in Taiwan. The majority of Elitegroup's production is now based in Shenzhen and Dongguan in China's Gaungdong Province. The Chungli factory is able to produce up to 200,000 notebook computers each month, local Chinese-language media reported at the weekend. Elitegroup's spokesperson Chen Ming-tsun (陳明村) was unavailable to confirm the figure yesterday.

"There has been speculation that Asustek plans to [use the Elitegroup purchase to] get orders from Apple Computer Inc," said Steven Tseng (曾緒良), an analyst at Yuanta Core Pacific Securities (元大京華證券), adding that it is unlikely that this will happen. "Elitegroup has been very close to Apple for years."

Local Chinese-language media had speculated that the Asustek deal would enable it to produce Apple products very soon after taking over the factory.

Chen also poured cold water on talk of Apple orders for Asustek.

"Elitegroup provides a very good level of service to Apple," Chen said. "I don't think it is likely that Asustek can win orders from Apple."

Tseng expressed skepticism over talk of moving the manufacture of iBooks to Elitegroup's factories in China, saying the company's notebook operations in China were not "smooth" enough yet to take on Apple's high-end products. The move to sell the Chungli plant may simply be the result of declining orders, Tseng said.

"The suggestion to me is that Elitegroup's [order] momentum beyond the second quarter is not as great as predicted," he said.

Last year Taiwan produced nearly two-thirds of all the notebooks computers sold worldwide, amounting to 30 million units, the government-funded Market Intelligence Center reported.

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