As an industrial downturn continues to build momentum, some electronics companies in August began to coax production line workers and engineers into taking more days off by using up this year’s quota, or even using next year’s quota in advance.
This is usually the first step corporations take to cut costs in difficult times. This approach allows employers to maintain their necessary workforce so they can jump on opportunities when demand returns. Reducing travel and hiring freezes also help employers cut spending.
“We are resuming cost-saving measures, including limiting business travel and meals as we did during the last financial crisis beginning in 2008,” Delta Electronics chief executive Yancey Hai (海英俊) told investors in August after the world’s top manufacturer of switching power supplies posted its weakest quarterly profits in two years for the second quarter.
Though corporate executives tend to be tough with their personnel policies, they are more than willing to lavish money on developing cutting-edge technologies that they believe will help them become the early beneficiaries of the next upturn.
This explains the rationale behind US search engine giant Google’s latest US$200 million investment announced on Wednesday. Google plans to build three new data centers in Taiwan, Hong Kong and Singapore to tap the fast-growing Internet traffic in China and other Asian nations.
This expansion in data centers indicates strong growth momentum for cloud-based computing services, which provide shared resources, software and information to computers and mobile devices via remote servers, meaning less demand for high performance PCs.
The hardware and software relating to cloud-based computing services are becoming major targets of companies at home and overseas.
And even shareholders are happy: On Thursday, one day after Google’s plan was announced, the stock prices of local cloud-based computing-enabled server suppliers Quanta Computer and Wistron jumped 4.67 percent and 1.08 percent respectively.
Quanta and Wistron are the laptop computer makers investing most aggressively in cloud-based computing technologies and products, and diversifying away from the traditional laptop business as the PC loses its position as the sole device used to access the Internet.
Quanta, the world’s biggest contract notebook computer maker, counts Google, social network company Facebook and online bookstore Amazon as its clients of servers and storage used in data centers that enable cloud-based computing services.
Quanta chairman Barry Lam (林百里) said cloud-based computing products would continue to grow, buckling the downtrend of PC consumption and Quanta would continue investing in this area.
“We foresaw this trend and we’ve invested in it ever since,” Lam told investors in August, adding that this area was supporting the company’s growth now that the laptop computer business was on the wane.
Meanwhile, Compal Electronics saw its share price plunge 2.78 percent on Thursday: The company spent the last year expanding its laptop market share to surpass Quanta, failing to recognize cloud-based computing as a potential business.
To play catch-up, Compal said it would join a local cloud-computing promotion forum, which launches today. Quanta, the nation’s major cable TV operators and Yahoo will also attend the forum to promote the use of cloud-based computing technology to deliver Internet TV programs.
It is too early to tell if those investments will pay off, but no company, even Microsoft, can afford to ignore new technologies.
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