Tue, Jan 17, 2006 - Page 11 News List

Taiwan's computer firms look at ways to diversify

BRANCHING OUT As well as developing their products, many Taiwanese firms have been relocating their manufacturing operations to China in a bid to cut costs

By Jason Tan  /  STAFF REPORTER

"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 (大眾電腦) shut down its Taiwanese factory, becoming the latest Taiwanese laptop maker to move its production facilities to China.

"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 (華碩電腦), as its upcoming notebook "A9" will be its first laptop entirely designed, developed and manufactured across the Taiwan Strait.

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.

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