Acer Inc to spin off all production units in July

Acer Inc (宏電), a Taiwanese computer maker, will spin off its manufacturing units to form a separate company in July as part of a restructuring plan started last year.

The new company, capitalized at as much as NT$10 billion (US$294 million), will run all of Acer's computer-making units, said Co-chief Executive Simon Lin (林憲銘). Lin, who oversees Acer's manufacturing businesses, will manage the new company, part of which Acer plans to sell publicly in Taiwan within three years.

Acer hopes the restructuring will increase profitability and reduce concern among customers that it's competing with them by making machines under its own label. Under the plan, second co-chief executive Wang Chen-tang (王振堂) will stay with Acer Inc to oversee the marketing of own-label PCs made by the new company.

"Clients will appreciate our efforts to distance the contract-manufacturing units from our private-label businesses in a bid to protect their interests," Lin said. "Clients will place more orders once they have peace of mind." Acer has said it expects to lose money on sales of own-label computers in the first half of this year.

By contrast, it hopes to break even in its made-to-order businesses in the second and third quarters, Lin said. Overall, the company lost NT$114 million on operations in the first quarter, although it achieved a profit by selling at least NT$4.3 billion worth of investments.

The company predicts that a recovery in worldwide computer demand will help restore it to profitability by year's end.

"Clients are holding back their orders in the second and the third quarters, so we are betting orders will be unleashed in the fourth quarter," Lin said.