Tue, Aug 07, 2007 - Page 12 News List

Simplo adds to Jiangsu investment

BEFORE THE PEAK With a shortage in notebook parts looming, a fire at the plant is expected to disrupt the production of at least 100,000 battery packs this month

By Jason Tan  /  STAFF REPORTER

Simplo Technology Co (新普科技), the world's largest maker of laptop battery packs, said yesterday it would increase its investment in a new Chinese plant to expand capacity.

It said the decision was not related to a recent fire incident there.

The company said that it had poured US$5.5 million into the Jiangsu Province facility, adding to the initial capital of US$19.5 million.

"We submitted an investment proposal to the government, which took over a month to give us the go-ahead," Simplo spokeswoman Jackie Ding (丁惠敏) said.

The investment was not linked to the fire that occurred at the plant on Friday, Ding said.

The facility, which was completed last year and started mass production this year, was damaged by a fire that broke out during lunchtime.

The cause was a short circuit in testing equipment.

No one was injured and the company moved staff, raw materials and equipment to a second factory in Songjiang.

The incident would disrupt production to the order of 100,000 battery packs this month, affecting its capacity of 1 million packs per month.

The loss will be less than US$1 million, part of which covered by insurance, Ding said.

"We are trying to communicate with clients and hope to make up for the lost shipments next month," she said.

Its client base includes the nation's top-tier notebook contract makers, such as Quanta Computer Inc (廣達), Compal Electronics Inc (仁寶電腦) and Wistron Corp (緯創).

As normal operations will not resume until six to eight weeks, the Songjiang facility will take over with round-the-clock production, Simplo said.

The incident could add to component shortages in the notebook industry in the busy second half.

Kirk Yang (楊應超), who tracks the PC sector for Citigroup Research, said last week that there was a risk of a component shortage even before the peak shipment months of October and November.

Components include batteries, liquid-crystal-display panels, printed circuit boards and power management chips, he said.

However, Simplo said the disruption would not affect its annual shipment target.

It will rise by more than 30 percent from 16 million packs shipped last year, Ding said.

Simplo, which will release its second-quarter earnings this month, projected its second-quarter sales would increase 40 percent year-on-year to NT$5.05 billion (US$153 million).

Earning per share will be approximately NT$3.37 to NT$3.43, it said.

Its stock closed unchanged at NT$204 in Taipei yesterday.

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