Fri, Oct 17, 2003 - Page 10 News List

Hewlett-Packard plans no change in Taiwan strategy

By Lisa Wang  /  STAFF REPORTER

Local manufacturers will continue to play a key role as Hewlett-Packard Co shifts its focus to mobile products, but cross-strait links remain a concern for the computer-making giant when it considers strengthening local partnerships, an HP official said yesterday.

"Taiwan plays a very important role as HP's technological and manufacturing partner," said Duane Zitzner, HP's executive vice president of the company's personal systems group. "We know that many of our PCs, servers and products come as a direct and indirect result of our collaboration and partnership with [Taiwanese companies]."

With the sharp increase of hot spots and a spike in global notebook PC sales last year, Zitzner said HP sees mobility devices as a new area which will have high growth in the future and hopes to see tighter partnership with local suppliers in this area.

HP, the biggest foreign procurer for local hardware products, is working closely with Taiwanese companies to develop new products and to pitch them into global markets.

HP outsources about 90 percent of its laptop computers from Quanta Computer Inc (廣達電腦) and Compal Electronics Inc. The company also farmed-out handheld device production to High Tech Computer Corp (宏達電子).

Zitzner said that enhancing the efficiency of the supply chain was an important issue, but a weak area for local firms as they move more production lines to China.

Though HP chose to avoid lobbying for direct links, Zitzner's comments hint that the continuation of the ban could weigh on local companies' efforts to improve operational efficiency.

Zitzner made the remarks when attending a summit held yesterday in Taipei. The event, a warm-up for the Taiwan Business Alliance Conference which kicks off on Sunday, highlighted how the Taiwanese information technology sector should react to the trend of moving production lines to China, while keeping their research centers in Taiwan.

During the summit, Quanta President Michael Wang (王震華) said that better cross-strait logistics management capability will be crucial in maintaining local companies' competitiveness, but the government's assistance is also necessary.

Expressing similar concerns, Inventec Group (英業達集團) CEO Richard Lee (李詩欽) said that lifting the direct transportation ban and keeping a stable relationship with Beijing is all it wants from the government.

Sean Wu (吳翔), an industry analyst with ABN-AMRO Securities, however, did not believe the issue of direct links was the determining factor for HP to pick its partners in the nation.

"Taiwanese companies' design capability is strong enough to keep orders from big international PC companies like HP. And most of them already set up plants in China," Wu explained.

"[Direct links is] not the deciding factor for local companies to land a deal," Wu said.

Low prices were still the most important factor that would affect HP's decision to place orders, said an industry watcher with ABN-AMRO Asset Management, who requested anonymity.

HP booked nearly US$15 billion worth of products from local companies last year, and is expected to grow another 7 percent to about US$16 billion this year, according to the statistics provided by the Industrial Development Bureau.

The bureau predicted that the production value of local hardware manufacturers will rise 10 percent this year to US$52 billion from US$47 billion recorded last year.

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