Compal bets on Intel Centrino chip

Compal Electronics Inc (仁寶電腦), the world's second-largest maker of notebook computers, expects products using Intel Corp's new Centrino chips to increase to half of its shipments by the fourth quarter from 5 percent now.

Intel's drive to market the wireless-enabled chips should help lift Compal's notebook shipments by more than 20 percent this year, Compal chief executive Ray Chen (陳瑞聰) said in an interview.

Intel, the world's biggest chipmaker, is betting Centrino -- which enables laptops to connect to the Internet over a wireless link -- will help lift personal-computer sales after two-and-half years of sluggish demand.

Companies such as Compal and Quanta Computer Inc (廣達電腦), the No. 1 maker, produce about 80 percent of the world's laptops, a US$53 billion a year industry.

"We're expecting growth because of Intel's aggressive pricing strategy," Chen said. "The performance of the Centrino chips is also very good."

Intel this month cut the price of its Centrino chips by as much as 30 percent. The US company has said it will spend US$300 million to market Centrino, introduced in March, and is working with airports and restaurant chains to provide wireless access points. Centrino laptops also offer better battery performance, running for five hours or more on a single charge.

Compal shares rose 1.6 percent, or NT$0.70, to NT$45.60 yesterday. The shares have gained more than a quarter so far this year.

Chen is expecting Compal's sales this year to increase by more than the 14 percent growth forecast for the industry by researcher International Data Corp.

The company said it may beat its original target of shipping 5 million laptops this year, or more than 14 percent of the industry total of 35 million units expected by International Data.

Acer Inc, said yesterday it will start selling a Centrino-based notebook made by Compal in the third quarter that will have a retail price of less than US$1,000.

International Data expects the laptop market to grow faster than the overall PC industry.

The researcher cut its forecast for PC shipments to 6.3 percent growth to 145.2 million units this year, from a March estimate of 6.9 percent. Shipments next year will rise 10 percent to 160.1 million, it said.

"Desktop users are starting to swap their computers for notebooks," said International Data analyst Kitty Fok.

"Notebook PC prices are a lot more affordable for most people," she said.

The average selling price of a laptop computer will fall this year to about US$1,500 from US$1,640 last year, she said.

California-based Intel said on June 2 that it has cut the price of its Pentium M product line, the processor used in Centrino. The chipmaker also said it increased the Pentium M's speed by as much as 10 percent.

Intel reduced the price of a Centrino package using a 1.6 GHz chip to US$511 from US$725. The regular 1.7-gigahertz, the low-voltage 1.2 GHz and the ultra low-voltage 1 GHz will cost US$725, US$372 and US$350 respectively, according to the company's Web site.

Intel has shipped about 1.2 million Centrino units for an average of US$325 apiece, Lehman Brothers analyst Dan Niles said in a report earlier this month.

That's helped the company raise its overall processor average selling price to US$152, higher than the US$130 average it fetches for desktop chips, which account for about 76 percent of the processors it sells, Niles said.