When founding Quanta Computer Inc (
This was a bold move, considering that the 1980s was the age of the rise of desktop computers, especially with IBM Corp betting heavily on their desktop machines to be tomorrow's stars.
"People laughed at us and viewed Quanta's first portable products as a piece of junk at that time," Lam said at a Jan. 5 media roundtable on Taiwan's competitiveness.
But the contempt did not deter Quanta's determination to pursue laptop production, and the firm's far-sightedness has turned it into the world's largest notebook contract maker, with volumes hitting around 18 million units last year. The company's customers include computer vendors such as Apple Computer Inc, Dell Inc, Hewlett-Packard Co, Matsushita Electric Industrial Co and Sony Corp.
No bed of roses
However, the notebook production business is not a bed of roses for Quanta, as it is faced with the issue of lower margins, along with other makers.
"In fact, most notebook contract makers are now posting much lower profit margins than the 5 to 6 percent reported. A five-percent margin is already a good deal to most," said Albert Chen (
This probably challenges makers to think of their next "winning formula," and Quanta is no exception.
"What's next after notebooks? Computers are only accessible to fewer than 20 percent of the world's population. How can we provide different forms of devices to make mobile computing possible to most?" Lam asked.
This probably explains the rationale behind Quanta's participation in the "One Laptop per Child" project.
Launched in January last year by Nicholas Negroponte, chairman and co-founder of the Massachusetts Institute of Technology's Media Lab, the scheme aims to develop computers for children around the world priced at US$100, far lower than the current cheap notebooks sold at US$500.
While industry watchers question the viability of the project, which is set to churn out 5 million to 15 million units of budget laptops by the end of this year, Quanta seems to be unperturbed and is again convinced that it is on the right track.
Quanta is just one of the cases where local PC makers are attempting to diversify into new market segments, or "blue oceans," to maintain future competitiveness.
"Blue ocean strategy," a hot term in Taiwan's IT industry last year, refers to competition in an uncontested market space, while companies adopting "red ocean strategy" are those competing in an existing market and undercutting each other as most do now.
Acer Inc also realized that instead of concentrating all its efforts on the contract manufacturing business, it should dip into the blue ocean for growth.
The company, founded 30 years ago, thus spun off its manufacturing operations in 2000 to focus on globally marketing its brandname products including desktop and portable computers.
The efforts bore fruit last year as Acer successfully became the world's fourth largest branded computer maker, pushing it one step closer to joining the top-three club next year.
What consumers want
However, understanding what consumers really want is the toughest job for contract makers venturing into brandname business, as they have long been designing and manufacturing products based on clients' requirements, said Simon Yang (
"They need to enhance after-sales services to listen to consumers' voices, and focus on various markets with smaller volumes as a start," Yang said.
By dedicating resources to more markets, the volumes added up in total would be significant, which would help to boost a company's market share, Yang added.
In addition to adopting a "blue ocean" strategy, Taiwanese makers have been quick to relocate assembly lines offshore, including to China, to improve margins, taking advantage of the lower labor and production costs there.
Last year, First International Computer Co (
"Now, over 90 percent of Taiwanese notebook production is being churned out in China," MIC's Chen said.
Shipments of notebook computers are expected to climb 18 percent to US$35.8 billion this year, according to the institute's forecast.
But the heart of their research and development (R&D) remains in Taiwan, at least for now.
"However, we see the trend of R&D moving gradually to the mainland over these few years, depending on the maturity of the engineers there," Chen added.
A case in point is the nation's largest laptop maker Asustek Computer Inc (
Quanta's Lam said that the number of local engineering graduates every year is insufficient to deal with the industry demand and that companies have to turn to China.
"But the quality of local engineers here is still better compared to their Chinese counterparts," Lam said.
In Chen's opininon, it is irrelevant whether notebook manufacturing or R&D is done locally or offshore because it is not equivalent to the competitiveness of the industry.
"Companies will eventually find their own `blue ocean strategy' to embrace the competition, as they always did in the past," he said.
With an approval rating of just two percent, Peruvian President Dina Boluarte might be the world’s most unpopular leader, according to pollsters. Protests greeted her rise to power 29 months ago, and have marked her entire term — joined by assorted scandals, investigations, controversies and a surge in gang violence. The 63-year-old is the target of a dozen probes, including for her alleged failure to declare gifts of luxury jewels and watches, a scandal inevitably dubbed “Rolexgate.” She is also under the microscope for a two-week undeclared absence for nose surgery — which she insists was medical, not cosmetic — and is
CAUTIOUS RECOVERY: While the manufacturing sector returned to growth amid the US-China trade truce, firms remain wary as uncertainty clouds the outlook, the CIER said The local manufacturing sector returned to expansion last month, as the official purchasing managers’ index (PMI) rose 2.1 points to 51.0, driven by a temporary easing in US-China trade tensions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The PMI gauges the health of the manufacturing industry, with readings above 50 indicating expansion and those below 50 signaling contraction. “Firms are not as pessimistic as they were in April, but they remain far from optimistic,” CIER president Lien Hsien-ming (連賢明) said at a news conference. The full impact of US tariff decisions is unlikely to become clear until later this month
GROWING CONCERN: Some senior Trump administration officials opposed the UAE expansion over fears that another TSMC project could jeopardize its US investment Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is evaluating building an advanced production facility in the United Arab Emirates (UAE) and has discussed the possibility with officials in US President Donald Trump’s administration, people familiar with the matter said, in a potentially major bet on the Middle East that would only come to fruition with Washington’s approval. The company has had multiple meetings in the past few months with US Special Envoy to the Middle East Steve Witkoff and officials from MGX, an influential investment vehicle overseen by the UAE president’s brother, the people said. The conversations are a continuation of talks that
CHIP DUTIES: TSMC said it voiced its concerns to Washington about tariffs, telling the US commerce department that it wants ‘fair treatment’ to protect its competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reiterated robust business prospects for this year as strong artificial intelligence (AI) chip demand from Nvidia Corp and other customers would absorb the impacts of US tariffs. “The impact of tariffs would be indirect, as the custom tax is the importers’ responsibility, not the exporters,” TSMC chairman and chief executive officer C.C. Wei (魏哲家) said at the chipmaker’s annual shareholders’ meeting in Hsinchu City. TSMC’s business could be affected if people become reluctant to buy electronics due to inflated prices, Wei said. In addition, the chipmaker has voiced its concern to the US Department of Commerce