The merger of US computer giants Hewlett-Packard Co and Compaq Computer Corp may lead to even stiffer competition among Taiwan's hard-pressed suppliers of information-technology-related products, analysts said yesterday.
They said that cut-throat contests would inevitably lead to some suppliers going to the wall in the wake of the merger.
Wang Sheng-hung, an official with the Market Intelligence Centre (
"But due to the merger, the `new H-P' suppliers may get bigger orders," Wang said.
The mentality was reflected on the Taiwan Stock Exchange Monday, with some "H-P concept" stocks including Compal Electronics Inc (
According to a joint statement released by HP and Compaq, the new company will retain the Hewlett-Packard name and is expected to have annual revenues of US$87.4 billion with operations in 160 countries.
The merger, unanimously approved by both companies' boards at the weekend, would save US$2.5 billion in costs per year.
Analysts said that the merged company is unlikely to shift its future orders from Taiwan to elsewhere in the world, given the competitive nature of Taiwan's information technology sector.
"Over a long term, the ties with the `new H-P' are expected to remain close," he said.
Compaq purchased US$9.7 billion worth of IT related products from Taiwan last year while H-P bought nearly US$5 billion.
"Taiwan is very strong in the PC-related fields. And therefore it is very, very uneasy for the 'new HP' to switch its orders to other countries," Chiang Chih-hau of Barits Securities Investment Trust Co (倍利投信) said, adding that its major rivals IBM Corp and Dell Computer Corp also purchase a lot of IT products from Taiwan.
In a bid to retain their competitive edge, Taiwan manufacturers have switched their production lines abroad, largely to China to cash in on cheap land and labor there.
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