Mon, May 05, 2003 - Page 10 News List

Companies within Taiwan fight SARS with diversification

STAFF WRITER

With the spread of severe acute respiratory syndrome (SARS) lingering on, many Taiwanese electronics manufacturers began to develop back-up plans to diversify their overseas production to reduce risks, according to a poll by the Council for Economic Planning and Development (CEPD).

The poll, which was conducted by the DigiTimes on April 30 and was commissioned by CEPD, showed some local manufacturers said they may shift some of their production in China to Taiwan, while some others said they may increase production in Eastern Europe.

The DigiTimes polled 300 executives of electronics manufacturers from 16 industries on their contingency plans after SARS began to spread throughout Asia.

The poll also showed that Taiwanese makers are concerned about international buyers shifting orders to the nation's regional competitors. Several computer motherboard makers that have operations in China said they may lose orders to their South Korean counterparts if they don't increased production in Malaysia and Mexico to assure supply chains remain unchanged.

But handset printed circuit board makers said they have seen international buyers begin to shift orders to either US or Japanese rivals lately, according to the poll.

While few companies are reporting manufacturing slowdowns or stalled product launches, several Taiwanese manufacturers fear SARS could lead to disruptions in the supply chains within China and have reconsidered the risk of concentrating their investments there, said Ho Mei-yueh (何美玥), vice chairman of the CEPD.

Last week, several leading manufacturers of notebooks, motherboards, and electrical machinery -- including Quanta Computer Inc (廣達電腦), Inventec Co (英業達), Asustek Computer Inc (華碩電腦) and Teco Electric & Machinery Co (東元電機) -- said they may postpone investment projects in China because of the SARS outbreak.

Teco, the nation's largest maker of industrial motors, may slowdown a planned NT$1 billion investment in China, chairman Theodore Huang (黃茂雄) said earlier last week. A local Chinese-language newspaper reported that Teco may move the project to Subic Bay industrial park in the Philippines, but Huang denied the reports.

Given cost considerations, most of Taiwan's computer and electronics makers have moved their production or assembly lines to China over the past decade. Taiwan businesses in China contributed 64 percent of the production value of the mainland's information industry last year (US$22.53 billion) according to government statistics.

Industry sources said Quanta, Inventec and Asustek are seeking to diversify their overseas investments by modeling the experience of Hon Hai Precision Industry Co (鴻海精密), viewing the Czech Republic as the most interesting investment destinations in Eastern Europe.

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