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Tue, Mar 26, 2002 - Page 18 News List

Local maker of notebook PCs quietly thrives amid slowdown

QUANTA AS EXAMPLE After weathering a crash in the global technology industry that shrouded its economy, Taiwan is creeping cautiously out of the darkness

By Mark Landler  /  NY TIMES NEWS SERVICE , LINKOU, TAIWAN

An Apple Computer Inc staff member shows off an LCD screen at an exhibition in Taipei's New York, New York complex earlier in the year. Apple is a major user of Quanta's manufacturing services.

PHOTO: CHIANG YING-YING, TAIPEI TIMES

As Barry Lam (林百里) shows a visitor around the art gallery on the top floor of his corporate headquarters, his gaze keeps coming back to a blue-and-green landscape by the legendary Chinese painter, Zhang Daqian (張大千).

The painting is called "Dawning Light in Autumn Gorges," and Lam loves its deep hues and moody, impressionistic style. And with its depiction of morning sun piercing the gloom of a mountain valley, the painting could stand as a metaphor for Taiwan, Lam's adoptive home and the birthplace of his 14-year-old company, Quanta Computer Inc (廣達電腦).

After weathering a crash in the global technology industry that shrouded its economy, Taiwan is creeping cautiously out of the darkness. Analysts say the nation's economy hit bottom late last year and will recover gradually along with the industry.

Through it all, though, Quanta maintained its glow, managing to grow briskly during Taiwan's recession by winning lucrative orders from Apple Computer Inc and Dell Computer Corp to overtake Japan's Toshiba Corp as the world's No. 1 maker of notebook PCs.

But that raises a question: If bad news ended up being good news for Quanta, then what will good news mean for the company? Lam, not surprisingly, thinks it will mean even more torrid growth. He predicts that Quanta will rack up US$5 billion in sales this year, a 51 percent increase over 2001. By 2004, he says, Quanta will be a US$10 billion company.

A fan of outsourcing

"Once companies begin to outsource, they never go back," Lam, 53, said in an interview at his office here, in a suburb of Taipei. "When companies minimize their costs, they can spend more on R&D and marketing. It's just very logical."

That logic has turned Quanta into perhaps the most important, least well-known computer maker in the world. Buy a notebook PC from Dell, Gateway Inc, Compaq Computer Corp or Hewlett-Packard Co, and the odds are that some or all of it was assembled by Quanta, which is now using its strength in laptops to move into the desktop market, too, by putting together Apple's stylish new iMac.

The company already produces PCs for seven of the top 10 notebook companies. It manufactures close to half the notebooks sold by Dell, making it by far Dell's largest supplier. It will turn out more than 5 million notebooks this year, 30 percent of all those made in Taiwan. The nation, in turn, makes 55 percent of the world's notebook computers.

"Quanta is to Dell what Dell is to the American consumer," said Peter Kurz, the chief executive of Insight Pacific, an investment advisory firm based in Taipei. "It is an industrial brand name, and that is not easy to replicate."

Keeping an eye on the us

Taiwan has a handful of these anonymous giants -- outfits with names like Compal Electronic Inc (仁寶電腦), Asustek Computer Inc (華碩電腦), Arima Computer Corp (華宇電腦) and Taiwan Semiconduc-tor Manufacturing Co (台積電) -- and they have turned this industrious nation into the subcontractor of choice for the global technology industry.

That is why, when spending on information technology dried up last year, it plunged Taiwan into the deepest recession in its history. It is also why executives here are watching the fledgling recovery in the United States with hope and trepidation.

Quanta's sales rose 32 percent in February over the previous year, to US$294 million, as US companies began placing orders for notebook computers, liquid-crystal displays, and other equipment. But the rebound is not across the board: United Microelectronics Corp (聯電), the second-largest contract manufacturer of semiconductors, said its sales declined 52 percent in February from a year ago.

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