Plans announced by US-personal computer vendor Gateway yesterday to trim operations could bring more procurement orders to Taiwan, but aside from that will have little impact here, analysts said yesterday.
Gateway, which had total global revenue of US$9.6 billion last year, is not so significant to Taiwan in terms of overall procurement, said Henry Wang (王漢寧), electronics industry analyst at EnTrust Securities Corp (永昌證券).
The top procurer of Taiwanese-made computer components is Compaq Computer, which earlier this year estimated its OEM orders would surpass US$10 billion for the year. Last year, Compaq purchased US$9.7 billion worth of computer components from Taiwan. These figures dwarf the value of Gateway's Taiwan purchases, analysts said.
Officials from Gateway yesterday declined to comment on the restructuring deal and its potential impact on Taiwan.
A press release distributed yesterday by the firm, however, said Gateway would immediately shutter company-owned offices throughout Asia, including Australia, Japan, Malaysia, New Zealand and Singapore.
The Web site for the firms' Hong Kong branch also indicated Gateway would close there as well, but the city was not listed on Gateway's press release.
The firm will also close a manufacturing facility in Salt Lake City, Utah, and shift its production to other parts of the US. Gateway also plans to simplify its product line as well, which could lead to a loss of orders for Taiwanese firms which manufacture computer products for the firm on an OEM basis, including notebook maker Quanta Computer Inc (廣達電腦), computer-manufacturer First International Computer Inc (大眾電腦), motherboard powerhouse Micro-Star International Co Ltd (微星科技), and Delta Electronics Inc (台達電子).
Every year, Gateway ranks among the top of the list in terms of electronics procurement from Taiwan. Its retreat from so many markets at one time is indicative of the current business environment for computer products.
For the first time in 15 years, the computer industry is projected to shrink this year, according to International Data Corp (IDC). The US-based market research firm predicts personal computer sales this year will fall in value from US$50.3 billion last year to US$38 billion this year. PC sales will not recover again until 2005, according to the forecast.
The harsh environment has already taken its toll on Taiwan. During the first half of this year, the total production value of Taiwan's computer hardware fell 13 percent year-on-year to US$17.1 billion due to slow demand, the Market Intelligence Center under the Institute for Information Industry reported last month.
Gateway expects to take a US$475 million restructuring charge in the third business quarter and is currently mulling shutting down offices throughout Europe as it retrenches operations.
Cost-cutting measures are expected to reduce its US workforce by 15 percent, while its worldwide employees will be reduced by 25 percent. The dollar value and employment reduction figure both factor in an end to European operations and would change if the company opts not to shut down offices there.Also See Gateway Inside
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