Mon, Apr 09, 2007 - Page 12 News List

Compal eyes Vietnam for factory

STAFF WRITER

Compal Electronics Inc (仁寶電腦), the world's second-largest laptop contract computer maker, is considering building a new factory in Vietnam.

Compal could join the growing number of Taiwanese electronic companies investing in Vietnam -- such as component maker Hon Hai Precision Industry Co (鴻海精密) -- in pursuit more cost-effective manufacturing sites outside China.

Compal is entering the final evaluation of a proposal to locate its new computer plant in the Southeast Asian country, the Chinese-language Economic Daily News reported yesterday, without giving further details.

"Compal will finalize the timetable and location in the second quarter at the earliest. The company has been studying the possibility of building a plant in Vietnam since last year," Compal spokesman Gary Lu (呂清雄) was quoted as saying by the newspaper.

Compal and its component suppliers were scheduled visit Vietnam to scout for factory sites and business opportunities, the report said.

Last year, Compal started assessing building factories in either China or Vietnam, the report said.

Compal forecast last month that its shipments of notebook computers would expand around 38 percent to 20 million units this year, from 14.5 million units last year. The company currently makes 24 million computers a year at its factories in Kunshan, China.

Compal, which supplies computers to Dell Inc and other big brands, could lack the capacity to match customers' demand next year if its shipments increase any faster, especially after adding Japanese computer vendor Toshiba Corp to its client portfolio this year, according to the report.

Lower wages and better preferential tax breaks promised by the Vietnamese government could be prime factors for choosing Vietnam, Compal chairman Rock Hsu (許勝雄) said earlier this year.

Cost efficiency is usually a major factor for local electronics companies, which mostly make products for global brands.

Compal posted a lower gross margin for last year at 4.8 percent from 6 percent in 2005. It said net income rose 4 percent to NT$8.75 billion last year, compared to NT$8.42 billion in 2005.

In addition, Vietnam is a springboard for Taiwanese electronics companies hoping to tap ASEAN markets, Hsu said.

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