On the heels of a government plan to allow Taiwanese firms to produce notebook computers in China, the chairman of Taiwan's largest notebook maker headed across the Taiwan Strait to oversee new investments, executives said yesterday.
Quanta Computer Inc (廣達電腦) is ready to invest US$18 million more in China to build additional production facilities in Shanghai at the request of its customers, which include US heavyweights Dell, Compaq and Hewlett-Packard.
"Quanta just began to invest in China late last year. Compal Electronic Inc (仁寶電腦) started investing in China at least five years ago, and Acer Inc (宏電) was investing across the Strait early last year," said James Huang, a computer industry analyst at National Securities Corp (建宏證券) in Taipei.
The Ministry of Economic Affairs announced new rules last Friday that now allow domestic companies to manufacture more than 120 products in China, including notebook computers, third-generation (3G) mobile phones and consumer electronics products.
Lifting the ban on notebook computer production in China was a particularly sensitive issue. Taiwan is the top notebook-PC maker in the world, accounting for an estimated 52 percent of the world's notebook supply this year, 13.1 million units.
Government officials feared the loss of the entire industry to China as firms take advantage of lower production costs there.
Notebook PC makers in Taiwan expect to save up to 5 percent on production costs by taking advantage of lower land and labor in China. The expanding market there has also been a draw. China's economy is set to expand by more than 7 percent this year while Taiwan faces rising unemployment and the worst economic slump on record.
Quanta plans to ramp notebook production in China to 100,000 notebooks per month next year -- that's 29 percent of the company's total production for this year. The company expects to produce 4.2 million notebook computers this year.
Quanta will complete construction of eight production facilities in Shanghai's Songjiang Export Processing Zone (
Huang said it takes around a year to make all necessary preparations to begin manufacturing notebook computers.
Compal and Acer, which rank No. 2 and No. 3 in the domestic notebook-PC sector, respectively, have had more time to develop reliable supply chains and train their Chinese laborers.
Compal was the third-largest notebook maker in Taiwan with 1.8 million units last year. The top spot went to Quanta with 2.6 million units, followed by Acer with 1.95 million units.
Quanta had already received government approval last year to invest US$26 million to expand its operations in Shanghai. The company began building bare-bones notebook computers for Sony and other customers there.
The new government policy allows notebook PC makers to build complete, high-end production systems in China.
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