Wed, Sep 11, 2002 page10

• Mitac may soon seal a deal with Dell

  COMPUTER PRODUCTION The local manufacturer said that US-based Dell Computer is interested in having so-called `white-box' PCs made on a large scale here in Taiwan

  • By Kevin Chen / STAFF REPORTER
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  Mitac International Corp (神達電腦) said yesterday it's close to cutting a major deal with Dell Computer Corp to supply no-name personal computers to the world's second-largest computer maker.

  "We have been in talks with Dell on the so-called `white-box' market for quite a while and are near to making the final decision soon," said Mitac spokeswoman Justine Liu (劉宜君). "We are planning to initially supply between 3 million and 4 million units to Dell per year."

  Liu declined to discuss the financial value of the deal or the technical specifications of the PCs.

  White-box computers are generally comprised of a barebones system, including a computer chassis, power supply and motherboard. But to sweeten the deal with Dell, Mitac may have promised to include the monitor and keyboard, an industry watcher said.

  "The deal -- if carried out as expected -- will be very positive for Mitac," said George Wu (吳裕良), analyst at Primasia Securities Co in Taipei. "For an industry where overall recovery has been slow to materialize and manufacturers are engaged in heated competition, Mitac needs to get this order from Dell to assure its survival."

  Shares of Mitac rose NT$0.90, or 6 percent, to close at NT$15.90 on the TAIEX yesterday.

  Mitac should be pricing white-box computers with extras at around US$300 per unit, Wu said. At those prices Mitac may bring in between US$900 million and US$1.2 billion in annual revenuesfor the multi-million unit sale. The deal is no small change for the local computer maker.

  "It would translate into US$75 million (NT$2.19 million) to US$100 million (NT$2.92 million) in monthly revenue for the company, compared to the NT$1.83 billion the company recorded in August," Wu said.

  The white-box market may prove a win-win situation for both Dell and Mitac.

  "On one hand, Dell is turning to Taiwanese manufacturers to outsource PCs in an effort to reduce production costs; on the other hand, Dell's white-box business is booming and wants to grab a bigger share of that market," Wu said.

  Sales of white-box computers account for about 30 percent of the PC market, according to IDC, a Massachusetts-based market research firm.

  Liu said Mitac hopes to boost sales through the white-box market. But production may not begin until the second quarter of next year, she said.

  While a global economic slowdown has taken its toll on corporate spending on information-technology products this year, Liu said Mitac has seen a steady rise in demand for its desktop computers in recent months and maintains a rosy outlook for the fourth quarter.

  Non-desktop PC products, such as workstations, servers, LCD monitors and notebook PCs currently account for over 50 percent of Mitac's total shipments, she said.
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