Fri, Jul 05, 2002 page11

• PDA sales up, but production going to China

  WESTWARD The products may be selling well, but a price war is starting and margins are already being cut, so manufacturers are moving to China for low-cost production

  • By Dan Nystedt / STAFF REPORTER
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  Sales of personal digital assistants (PDAs) by the nation's top ma-nufacturers have been on the rise since the Computex Taipei computer trade show was held early last month, four companies said yesterday. Tough competition may however prompt factories to move to China to lower costs.

  "We did see a lot of interest [at Computex]. There was one order from Central America for our non-bluetooth enabled PDA," said Alex Sharp, a marketing specialist at First International Computer Inc (大眾電腦).

  According to Justine Liu (劉宜君), spokeswoman at Mitac International Corp (神達電腦), their latest PDA offering, the Mio, is expected to land, "a couple of major orders." Customer interest has been so hot that the firm is hiring new R&D engineers with wireless-communications and PDA-design experience.

  Asustek Computer Inc (華碩電腦) and Compal Electronics Inc (仁寶電腦) also reported increased attention for their PDA devices. All four of the Taiwanese firms offer products that only run on Microsoft's Windows operating system for handhelds, the largest competitor to the world number one Palm operating system.

  These companies also said pressure has been building on them to transfer PDA production to China in order to pare costs.

  "There is a price war starting and margins are already being cut. Everybody is moving manufacturing to China for low-cost production," said an Asustek manager who requested anonymity.

  Mitac still produces its PDAs in Taiwan, but Liu said that could soon change.

  "We are thinking of moving [PDA] production to the Kunshan Industrial Park (昆山工業區) in Shanghai and we are building a factory and assembly line in Kunshan that should be completed within six months -- but we do not know yet when we will move," she said.

  The company already operates a PDA software-development center in Shanghai where it employs 200 software engineers, to the detriment of the Taiwan government's plan to build knowledge-based industries in Taiwan. The government has made software, semiconductors, biotechnology and TFT-LCD panels the four key industries of Taiwan's economic future.

  At First International, executives said PDA production might migrate to China in the long run, but their PDA production will remain in Taiwan until Chinese factories are modernized.

  "Manufacturing [PDAs] is very difficult and factories in China do not have the know-how to make this product. At First International we have manufactured other products, like motherboards and notebook [PCs] in China, but we make our PDA and all [Internet appliance] products in Taiwan," said Angela Wu (吳佩蓉), assistant supervisor of the networking and information marketing department.

  Wu said the supply of parts is not a factor in determining whether or not to move operations to China as there are ample parts suppliers in both countries and components can be shipped between the two economies.

  Market research firm Dataquest has said PDA sales will rise 18 percent from last year to 15.5 million units. Spending on the devices will rise by more than 20 percent to US$4.6 billion this year as color displays, telephony and other features that command higher prices catch on.
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