Asustek Computer Inc (華碩), the world’s fourth-largest PC vendor by shipments, might be entering one of its toughest operating periods this year after its ambition to branch out into multiple areas backfired and its core businesses face industry headwinds.
The company’s performance might hit a trough this quarter, after it last quarter posted its lowest net income in 23 quarters at NT$3.65 billion (US$121.18 million).
Asustek CEO Jerry Shen (沈振來) on May 11 attributed the decline to appreciation of the New Taiwan dollar; rising component costs for notebook computers and smartphones; and a product transition ahead of a new smartphone launch.
Photo: Chiang Ying-ying, AP
However, the company’s challenges are much bigger than that.
On May 8, Asustek chief operating officer and board member S.Y. Hsu (許先越) tendered his resignation to Shen, chairman Jonney Shih (施崇棠) and chief strategy officer Ted Hsu (徐世昌) via e-mail after more than 20 years at the company.
S.Y. Hsu played a major role in promoting Asustek’s first Eee PC in 2007, which helped the company significantly expand its global market share.
He was also the key player pushing the company’s Zenbook series of notebook computers over the past few years.
Despite S.Y. Hsu avoiding the spotlight since May 8, local media have reported that he resigned after failing to persuade the firm’s management to allocate more resources to his team — including research and development and marketing funding — from the smartphone business.
There has also been speculation about an internal power struggle in the company’s management.
However, Asustek has obviously made significant efforts to keep S.Y. Hsu on board, as he was named one of the key figures to lead the company’s latest restructuring program, which was announced on Friday.
In his new role overseeing both the notebook and desktop PC businesses, S.Y. Hsu is to have more resources and operational power, Asustek said, but added that there is no truth to rumors that an internal power struggle, an imbalance in resource allocations to different business units, or both, had anything to do with his resignation.
Over the past three years, Asustek has ambitiously branched out into various fields, including tablets, smartphones, virtual reality, augmented reality, robotics and artificial intelligence. The company over the past two years allocated more resources to the smartphone segment in a bid to grow handset revenue to above that of notebook’s by next year.
However, none of the new businesses, including smartphones, have eked out stable profits thus far. Moreover, by adding to its motherboard, desktop and notebook segments, the company has stretched its resources thin — in terms of limited capacity for engineers and research and development, while marketing and purchasing managers have been required to juggle several fields at the same time.
Asustek’s strategy of developing its non-PC businesses is correct, as the PC industry has been in decline for years, but it is questionable whether it was wise to extend its reach to so many fields simultaneously while its resources remain limited.
Asustek spokesman Nick Wu (吳長榮) said the company has high hopes that the latest corporate restructuring will optimize its resources and revitalize its momentum.
However, he might be overly optimistic, as a number of key figures remain in the dark about their future roles and the challenges for their tasks.
For instance, Chang Rangoon (張仰光), who previously headed the tablet team and has been named to lead a new gaming business unit as part of the restructuring, on Monday said that he did not know the details of his new operational scope or how many employees his new business unit would have.
“A lot of things have not been finalized. Jerry [Shen] and I have to discuss it,” Chang said on the sidelines of a pre-Computex news conference.
It remains to be seen if Asustek’s corporate restructuring will work in the long term, but concerns linger about the company’s decisionmaking and strategic planning, which could overshadow its performance in the remainder of the year.
PRICE HIKES: The war in the Middle East would not significantly disrupt supply in the short term, but semiconductor companies are facing price surges for materials Taiwan’s semiconductor companies are not facing imminent supply disruptions of essential chemicals or raw materials due to the war in the Middle East, but surges in material costs loom large, industry association SEMI Taiwan said yesterday. The association’s comments came amid growing concerns that supplies of helium and other key raw materials used in semiconductor production could become a choke point after Qatar shut down its liquefied natural gas (LNG) production and helium output earlier this month due to the conflict. Qatar is the second-largest LNG supplier in the world and accounts for about 33 percent of global helium output. Helium is
DOMESTIC COMPONENT: Huang identified several Taiwanese partners to be a key part of Nvidia’s Vera Rubin supply chain, including Asustek, Hon Hai and Wistron Nvidia Corp chief executive officer Jensen Huang (黃仁勳), addressing crowds at the company’s biggest annual event, unveiled a variety of new products while predicting that its flagship artificial intelligence (AI) processors would help generate US$1 trillion in sales through next year. During a two-and-a-half-hour keynote address, Huang announced plans to push deeper into central processing units (CPUs) — Intel Corp’s home turf — and introduced semiconductors made with technology acquired from start-up Groq Inc. The company even said it was developing chips for data centers in outer space. At the heart of Huang’s speech was the message that demand for computing power
OPTIMISTIC: Inflation still has a chance of remaining below the central bank’s 2 percent alert level, as Taiwan’s economy is resilient with healthy exports, the NDC minister said Taiwan’s inflation could exceed 2 percent this year if oil prices continue to surge amid escalating tensions in the Middle East, prompting the government to reassess its economic outlook, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. DGBAS Minister Chen Shu-tzu (陳淑姿) told lawmakers at a meeting of the legislature’s Finance Committee that the agency’s earlier growth forecast of 1.68 percent in the consumer price index (CPI) and 7.71 percent for GDP this year did not account for the ongoing Middle East conflict and would need revision, if tensions persist. The previous forecast assumed an average international crude price of
ELECTRIC DREAMS: Smart cities would use ‘virtual power plants,’ which integrate idle electricity use from households, businesses and factories, Asustek said Asustek Computer Inc (華碩) yesterday showcased key components of its artificial intelligence (AI)-driven smart city initiatives at a trade show in Taipei, eyeing new business opportunities as cities develop sovereign AI infrastructure. Advances in generative, multimodal and physical AI are driving cities toward a new phase of “sovereign AI,” Asustek cochief executive officer Samson Hu (胡書賓) told reporters on the sidelines of the Smart City Summit and Expo at Taipei Nangang Exhibition Center’s Hall 2. The company showcased its “AI City” framework, which comprises three layers — computing infrastructure centered on AI servers, AI models and a platform layer for data processing
RSS