Compal Electronics Inc (仁寶電腦), the world’s second-largest notebook computer maker on contract basis, plans to build a new plant in Brazil in the fourth quarter to cater to customers’ needs and to further reduce operational risks by diversifying manufacturing sites.
That will be a second step taken by the notebook manufacturer in diversifying its production lines to a more cost-effective location, from its major manufacturing base in China, on rising labor costs and labor contract laws.
VIETNAM
Compal is building a new plant in Vietnam and plans to produce as many as 300,000 notebooks a month starting in the second quarter of next year. Monthly production could expand to one million units in the future, the company’s chairman said.
“We want to help our customers enhance their competitiveness by building plants around the globe,” Compal chairman Rock Hsu (許勝雄) told reporters.
Compal makes notebooks for the world’s largest PC vendors including Hewlett-Packarad Co, Dell Inc and Acer Inc (宏碁).
The company has rented an empty plant in Brazil and planned to build another in the fourth quarter, Hsu said. He did not reveal details about the new production expansion.
PAYROLL
In May, Compal told investors that labor payroll could increase by 20 percent after the new labor rule takes effect this year. Compal operates three plants in China.
“Compal’s move comes to match recent consumer growth in emerging markets in South America,” said Sean Hsiao (蕭文良), who tracks NB industry for Fubon Securities Investment Services Co (富邦投顧).
Compal’s strategy may also include fending off growing competition from electronics manufacturing service providers (EMS) such as Hon Hai Precision Industry Co (鴻海精密), which have an intensive manufacturing network around the globe that includes Brazil, Hsiao said.
OPTIMISM
Compal’s production expansion is built on the company’s optimism that the laptop market will continue to grow as desktops are replaced and demand in emerging markets continues to grow, Hsu said.
Compal said it may ship 32 million laptops this year, up nearly 40 percent from 23 million units last year.
But Hsu said revenues growth for the Kinpo Group (金仁寶集團), which owns Compal, may slow as the US subprime crisis and weakening economic growth in Europe and China have caused consumers to tighten their spending.
“Like its Taiwanese peers, the group’s revenues will grow about 20 percent in the second half, compared to the first half, rather than 50 percent over the past years,” Hsu said.
Hsu also doubles as Kinpo Group chairman.
Compal shares fell 2.77 percent to NT$28.05 yesterday.
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