Philips to expand procurement

Royal Philips Electronics said yesterday that its purchases in Taiwan will expand by a double-digit percentage next year, after procuring NT$15 billion-worth of products here this year.

"We are exploring opportunities for local strategic partnerships through increasing procurement and outsourcing activities [in Taiwan]," Joseph Chuang (莊鈞源), chief executive officer (CEO) of Philips Electronics Industries (Taiwan) Ltd, told a briefing yesterday.

Philips is the 13th-largest multinational to procure goods in Taiwan. Chuang said there's still room for the company's outsourcing to grow after the Netherlands-headquartered company reduced its factories around the globe to around 100 from more than 400, and slashed its workforce to 166,800 from over 330,000.

Philips is seeking strategic alliances covering a wide range of cooperative relations in Taiwan, from supply relationships to joint ventures in five key sectors, including the wireless, digital television, automotive electronics, medical electronics and personal infotainment sectors, he said.

"There are many interested companies in talks with us currently ? and we expected to see the establishment of a few more joint ventures focusing on the five sectors next year," Chuang said.

He declined to reveal more details.

change focus

He encouraged Taiwanese information technology companies to divert their attention from personal computer (PC) manufacturing, which is encountering increasingly slim margins under pressure from global PC vendor clients such as Hewlett-Packard Co and Dell Inc, to new arenas such as medical electronics and digital home appliances.

Philips currently has two joint ventures in Taiwan. It controls 51 percent of Philips BenQ Digital Storage Inc (飛利浦明基), which was formed under a partnership with BenQ Corp (明基電通) to make optical storage products in February last year.

The joint venture is expected to generate 600 million euros (NT$25 billion) this year and see about 50 percent growth next year, Chuang said.

Philips also has a 48 percent stake in Arcadyan Technology Corp (智易科技), set up as part of a partnership with Accton Technology Corporation (智邦科技) to manufacture wireless products in July last year.

The company is also the biggest single shareholder of Taiwan Semiconductor Manufacturing Co (台積電), the world's largest made-to-order chipmaker, with a 19 percent stake.

Chuang, 54, is the second Taiwanese national to chair Philips Taiwan. Former chief executive Lo Yi-chiang (羅益強) took the helm in 1988 and became Philips' first Asian board member in 1996.

Chuang joined Philips Taiwan in 1985 and has served in several positions, including marketing manager in the semiconductor division, as well as president of sales for electronics components for Taiwan and the Asian Pacific.

"[I am] under high pressure after taking up the position," Chuang said.

`mutual interest'

"As a Taiwanese CEO, I hope to create more synergy and push forward the mutual interest between Philips and Taiwan's industry" through leveraging Philips' strengths in strong branding and advanced technology, and Taiwan's advantages, including low-cost manufacturing and a comprehensive supply chain, he said.