Taiwan laptop makers to jump the gun in China

In an apparent effort to bypass the government's "no haste, be patient" (戒急用忍) policy toward investment in China, several China-based Taiwanese computer makers will begin producing and shipping notebook computers in the first half of next year, according to Chinese language media.

The move is seen as a violation of the official ban on high-tech investments in China.

According to local media last week, Taiwan computer makers such as Quanta Computer Inc (廣達), Compal Electronics Inc (仁寶), Twinhead International Corp (倫飛), and Inventec Corp (英業達) have all decided to end low-level operations in China in favor of producing finished products -- such as laptop computers -- ahead of the government in Taiwan scrapping restrictions on investment in the mainland.

Regulation on investment in China is expected to be relaxed sometime next year.

To enhance their international market competitiveness by taking advantage of inexpensive production costs in China, Taiwan makers have agreed with their US and Japanese clients such as Dell Computer Corp (戴爾), Compaq (康柏), and Sharp (夏普) to begin to ship notebook computers made in their mainland factories next year.

Quanta, which received the green light from the Ministry of Economic Affairs (經濟部) last Friday to invest US$26 million (NT$8.45 billion) to expand its Shanghai operations, is expected to begin shipping notebooks in the first quarter of 2001.

According to Quanta Chairman Barry Lam (林百里), Taiwan's notebook PC makers have to expand their production lines in China to enhance production capacity.

"Poor production capacity may become a future crisis for the industry," Lam said.

Quanta, the island's biggest notebook computer maker, is expected to pump out 2.8 million units this year and will seek to match expected 2001 market demand for 4.5 million units.

Currently, Quanta supplies about 3.6 million units a year from its factories in Taiwan.

The company is banking on its mainland factories to help boost the company's total output.

Currently, nine of Taiwan's top-10 notebook makers have set up factories in China. First International Computer Inc (大眾), the only firm yet to make the jump is still studying possible production sites there, according to local reports.

Because the economics ministry is currently re-evaluating the government's regulations on investment in China, notebook computer makers are expected to further expand their production lines there.