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Michael Dell meets Taiwanese suppliers

Dell Inc chief executive Michael Dell yesterday met Taiwanese suppliers for the first time since reclaiming his job last month, spurring speculation that the world's top computer vendor may order more from local companies as part of its efforts to cope with falling market share.

To keep a low profile, Dell did not arrange a media session, nor reveal any new procurement strategies during his brief stay.

In a company statement, Dell reaffirmed "how Taiwan is home to some of the world's important technology companies."

"The country's commitment to innovation will help keep it at the center of technology change for years to come," he said at an event with business leaders and customers in Taipei.

Michael Dell returned to the helm after Hewlett-Packard Co overtook the company in the third and the fourth quarters last year to become the world's largest PC maker, fueled by strong momentum from markets outside the US such as Europe.

As a result, speculation swirled recently that Dell may strengthen its partnership with Taiwanese suppliers by raising the share of complete notebook computers it buys to regain market share.

Dell used to buy "barebone" -- or half-assembled -- systems and then assemble them into a complete notebook computers by adding components such as processors and flat panels.

Taiwanese laptop computer makers Compal Electronics Inc (仁寶), Quanta Computer Inc (廣達電腦) and Wistron Corp (緯創) are Dell's major partners in Taiwan.

"It's foreseeable that Dell's partnership with local companies will be closer as that will be one of the major approaches Dell can do to get itself out of the woods," said Sean Hsiao (蕭文良), a computer industry analyst with Fubon Securities Investment Services Co (富邦投顧).

Dell could speed the product's time to market and help narrow the gap between the company and consumers by ordering more notebook computers and skipping the step of shipping them to its factories for assembly, Hsiao said.

"By shrinking the work time, Dell will ultimately regain some market share," Hsiao said.

It would be a win-win situation for both parties, as local notebook computer makers would increase their revenues and their gross profits for this year in the wake of closer cooperation, Hsiao forecast.

Last year, Dell's former chief executive Kevin Rollins said in Taipei that the company would purchase up to US$12.5 billion worth of computers and electronics to meet demand, up 20 percent from US$10 billion in 2005.

Shares of Quanta, Dell's biggest local supplier, advanced 1.96 percent to NT$52 (US$1.57), outperforming the benchmark TAIEX index's 0.23-percent gain yesterday. Shares of Compal and Wistron decreased 0.35 percent and 0.1 percent, respectively, to NT$27.8 and NT$49.55.
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