Compal Electronics Inc (仁寶電腦), the world’s second-largest contract PC manufacturer, expects to break its sales record this year with total notebook shipments reaching 35 million units, bolstered by corporate replacement demand amid the expected global economic recovery.
“Laptop shipments in August and September should both grow month-on-month, hence, we’re raising our third-quarter shipment growth guidance to 20 percent quarter-on-quarter, from the previous forecast of 10 percent to 15 percent,” Compal president Ray Chen (陳瑞聰) told an investor conference yesterday.
Despite increased production, the Neihu-based company expects gross margin to remain flat at 6.4 percent for the quarter.
For the fourth quarter, the PC maker expects to see around 10 percent quarter-on-quarter shipment growth, as major vendor clients move away from ordering semi-complete notebooks to finished notebooks.
Chen told investors yesterday that Compal’s top clients were increasingly outsourcing their production work so they could concentrate on core design.
Compal manufactures for the world’s top three PC vendors: Hewlett-Packard Co, Dell Inc and Acer Inc.
There was wide publicity on consumer ultra-low-voltage (CULV) notebooks in the first quarter of this year; however, CULV laptops never garnered enough consumer interest worldwide to become mainstream, Chen said.
“This year, we made the right bet on low-cost netbooks, instead of CULV notebooks. Just when the whole industry was crazy about CULV, we decided to do the opposite. And it has paid off big. Thankfully, our CULV manufacturing only accounts for 5 percent or less of our entire notebook production,” Chen said.
Compal also remains upbeat on next year’s outlook, as it expects to grow with or outpace the industry, with annual shipments increasing by between 15 percent and 20 percent, Chen said.
The president quelled investor worries about Hon Hai Precision Industry Co’s (鴻海精密) recent announcement it would enter the notebook manufacturing business, since Hon Hai is currently Compal’s main metal casing provider and Hon Hai’s subsidiary, Foxconn Technology Co (鴻準精密), makes 40 percent of Compal’s plastic casings.
“Ju Teng International Holding Ltd (巨騰) is our vertical integration partner. This alliance currently provides between 25 percent and 30 percent of our plastic casings. We hope to increase this figure to more than 50 percent by the second quarter of next year and be less reliant on outside component suppliers,” Chen said.
By the second quarter of next year, Compal expects between 2 million and 2.5 million plastic casings to come from its alliance with Ju Teng.
Chen said he does not view Hon Hai as its notebook manufacturing rival.
“Maybe Hon Hai will become our competitor in two or three years’ time,” he said.
Meanwhile, Compal’s strategic investment in Chunghwa Picture Tubes Ltd (CPT, 華映), a liquid-crystal-display (LCD) panel maker for notebooks, has been paying off since the first half of this year, he said.
“As we anticipate panel prices going up in 2010, we will recalibrate and have CPT manufacture more notebook panels for us,” Chen said.
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