Taiwan's manufacturers of game consoles can expect bumper orders in the third quarter, a report in the local Chinese-language media said yesterday. Sony Corp, which makes the world's most popular game console, the PlayStation 2 (PS2), plans to outsource orders for eight million of the devices to Hon Hai Precision Industry Co (鴻海精密) and Asustek Computer Inc (華碩電腦) next quarter, the report said without naming its source.
One analyst was surprised by the scale of the orders.
"The figures are much larger than my forecasts," said William Fong (方偉昌), an analyst at Primasia Securities Co.
"I thought Sony would outsource 70 to 80 percent of its game consoles to Taiwan manufacturers, but the report claims it will be as high as 90 percent," he said.
Another agreed. "These figures are aggressive, but I cannot say they are impossible," said Sharon Su (
"Sony should increase its outsourcing from last year. Both companies will see an improvement," she said.
By yearend Hon Hai will have shipped 10 million consoles, and Asustek 9 million, the report said.
Hon Hai has gained larger orders from Sony than Asustek in the past, analysts said.
"Shipments of 10 million by yearend for Hon Hai are possible, but Asustek shipped less than 3 million game consoles in the first half of the year," Fong said. "To ship 9 million by the end of the year, Asustek will have to ship 1 million units each month from now until the end of the year and I'm conservative about the possibility of that."
But Asustek's weaker position last year may give it more room to grow this year.
"Hon Hai did a lot more with Sony last year, so Asustek has better room for improvement as it is starting from a lower base," Su said.
The government-funded Market Intelligence Center (MIC) predicted yesterday that Taiwan will ship a total of 18.45 million game consoles - worth nearly US$2 billion -- this year, just short of the local media's prediction for Hon Hai and Asustek's combined shipments.
The increase in orders may indicate that Sony is banking on a bumper Christmas season, Fong said. Next-quarter orders will be critical.
"In the second quarter the SARS impact meant that companies delayed orders into the third quarter, so sales in the third quarter are going to be a major indicator of the health of the industry," Fong said.
Both companies remained tight-lipped about their third-quarter orders yesterday.
"We sign confidentiality contracts with our OEM customers, so we don't comment on reports like that," Asustek spokesman Will Tang told the Taipei Times yesterday.
"The figures the newspapers mention are from research reports," said Hon Hai spokesman Edmund Ding (丁祈安). "We don't usually confirm those numbers."
Many large technology companies like Sony outsource the manufacture of their products to third parties on an "original equipment manufacturing (OEM)" or custom-made basis.
In related news, Hungarian daily Vilaggazdasag reported yesterday that Hon Hai plans to build a US$44 million factory in Komarom on the Slovakian border, without giving the source of the informatio n. The plant is expected to supply "precision plastic and electronic parts" to Nokia Oyj, the world's largest mobile phone maker, the report said.
Nokia opened a 25-billion forint (US$100 million) factory in Komarom in May 2000. Hon Hai's spokesman declined to confirm the plan yesterday.
RSS