Contract laptop maker Quanta Computer Inc (廣達電腦) yesterday said that it is considering relocating production lines out of China to cope with potential increases in US tariffs on a wider range of Chinese imports.
Quanta’s comments came after the impact of US-China trade dispute spread to laptops and smartphones as US President Donald Trump threatened to raise the duties up to 25 percent on US$325 billion of Chinese imports after China said on Monday that it would increase tariffs to as high as 25 percent on US$60 billion of US products beginning next month.
In response to the escalation of the US-China trade dispute, Quanta vice chairman C.C. Leung (梁次震) said the company is discussing with clients and component suppliers how to speedily tackle the problem.
Quanta said it is scouting potential manufacturing sites around the globe in a bid to circumvent the heavy US levies.
It would take time to make a final decision, as it requires an extensive supply chain cluster to complete the production of laptops, it said.
In Taiwan, the PC maker acquired production facilities in Taoyuan for NT$4.28 billion (US$137.5 million) in November last year, offering flexibility for clients in shifting their manufacturing site for specific products, such as high-margin servers.
Quanta assembles notebooks for Apple Inc, HP Inc and Dell Inc, according to market researcher TrendForce Corp (集邦科技).
Quanta and its local peers Compal Electronics Inc (仁寶電腦) and Wistron Corp (緯創) might suffer the brunt of the higher tariffs, as laptops account for 10 percent of US$325 billion of goods covered by Trump’s latest tariffs, TrendForce said yesterday.
The three firms assemble 90 percent of the laptops sold by Apple, HP and Dell, it said.
Compal in March said that it has budgeted NT$5.5 billion for capacity expansions in Vietnam, Chongqing, China, and Taoyuan’s Pingjhen District (平鎮) this year in an effort to lessen the effects of the tariffs.
Quanta yesterday posted a net profit of NT$3.12 billion for the first quarter, up 14.2 percent from NT$2.73 billion in the same period last year.
Earnings per share rose to NT$0.81 from NT$0.71.
Gross margin improved from 4.18 percent to 4.47 percent due to a larger revenue contribution from non-PC products, which have better margins, the company said.
Laptop shipments sank 18 percent year-on-year last quarter, partly due to a shortage of Intel Corp central processing units, but shipments are expected to increase by more than 20 percent this quarter as the supply constraint eases, it said.
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