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Asustek plans big for handset market

Asustek Computer Co (華碩電腦), Taiwan's biggest motherboard maker, aims to capture a 10 percent share of the handset market within 15 months after gaining a foothold in the consumer sector, a company executive said.

"We hope to attain one of the top five positions in the home market next year by boosting our product portfolio," Benson Lin (林宗樑), general manager of Asustek's Asia-Pacific division, said yesterday.

"As we have successfully expanded into the laptop computer sector, we believe we can repeat that success," Lin said.

The company entered the notebook computer market at the bottom five years ago and had garnered 30 percent of the local market share by the second quarter of this year, making it the top computer brand in the country, he said.

Asustek rolled out its second mobile phone under its own brandname, the J101, in early June after unveiling the J100 in December.

Within three months of the launch, Lin said, the company had already sold 30,000 units of the J101, a clamshell phone equipped with a 0.3 megapixel camera.

"The market demand has exceeded our expectations," he said.

By the end of the year, Asustek plans to unveil at least three new models, including one with a 1 megapixel camera.

In addition to its own brand, Asustek has recently started making phones for Chinese home-appliance giant Haier Group (海爾).

Asustek said it shipped a combined 100,000 handsets in the first eight months of the year.

The company hopes to sell a total of 250,000 units this year and at least 1 million next year, Lin said. This excludes its original-equipment manufacturing business.

He said it was too early to talk about the possible sales contribution from the new mobile-phone business and declined to comment on a report that Asustek has received orders from Germany's Siemens AG to make mobile phones enabled with advanced third-generation services next year.

"I don't expect the mobile-phone business to make a meaningful contribution to Asustek in the short term," said Vincent Chen (陳豊丰), an analyst with CLSA Ltd in Taipei.

"Asustek is a latecomer in the handset arena, in which most Taiwanese manufacturers have to count on outsourcing from international vendors to make profits. It is already too crowded to welcome new players," he said.

Although laptop computers are overtaking motherboards as Asustek's cash cow, it is hard to predict whether the company will be able to duplicate its success this time, Chen said.

"Besides, it's a long and tough road to develop a brand-name business," he added.

Motherboard sales will still make the biggest contribution to Asustek's earnings this year by bringing in 50 percent of the expected NT$15.58 billion, while laptop computers are expected to contribute 35 percent, Chen said.

Asustek's earnings for last year stood at NT$15.7 billion.

This year, the company's operating margin is expected to edge up to 5.9 percent from 5.4 percent, boosted by its own-brand business, although there is room for a downside, Chen said.

Asustek shares climbed 0.69 percent to NT$73 on the TAIEX yesterday.
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