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‘Bleeding’ from tablet segment to end by third quarter: Asustek CEO Jerry Shen

REMEDIAL MEASURES:The technology firm reduced production, moved engineers to other businesses and cut its product lineup to offset weakness in the sector

By Lauly Li  /  Staff reporter

Asustek Computer Inc (華碩) foresees its tablet business breaking even in the third quarter of this year, after posting losses for more than a year due to a drop in global demand, Asustek CEO Jerry Shen (沈振來) said on Feb. 15.

“We have been stepping up our efforts... The tablet segment should stop bleeding in the third quarter at the latest,” Shen told a media gathering in Taipei.

Asustek’s tablet business accounted for nearly 20 percent of its revenue in 2013, the firm’s data showed, while International Data Corp ranked Asustek the world’s No. 4 tablet vendor in 2014 with a 3.4 percent share of the market.

However, due to a saturated global market and growing popularity of larger-screen smartphones, the Taiwanese company has seen consecutive years of shipment declines.

Asustek last year shipped 3.4 million tablets, a 52.11 percent decrease from 7.1 million units in 2015, market researcher TrendForce Corp (集邦科技) data showed.

That was the third consecutive year of a double-digit percentage contraction in shipments, company data showed.

Due to the dire situation, Asustek said that it began to rethink its tablet production strategy in the second quarter of last year.

The firm downsized its tablet manufacturing workforce, transferring the segment’s engineers — who at one point numbered 1,000 — to its robotics and augmented and virtual-reality units, Shen said.

Asustek also strategically reduced its number of new tablet models and cut back marketing efforts in regions where sales had disappointed, in a bid to offset the influence of the sector’s weakness, the company said, adding that it also shifted marketing resources from tablets to notebook computers and smartphones.

The negative effects of the tablet business this quarter will largely be mitigated after the transition efforts last quarter, Shen said.

The company’s total tablet shipments this year are expected to be flat from last year’s 3.4 million units, he said, adding that Asustek’s mobile business, which includes the tablet and smartphone segments, contributed 18 percent of last year’s total revenue of NT$466.99 billion (US$15.24 billion).

Due to the decline in tablet shipments, market analysts have estimated that the sales contribution from the segment might only reach a single-digit percentage.

TrendForce forecast that global tablet shipments would total 148 million units this year, which would represent a 6.1 percent year-on-year decrease from last year’s 157 million tablets.

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