Local electronics manufacturers may see orders from China drop as foreign companies delay or switch production away from the country because of fears over SARS, market analysts said yesterday.
"Worries that assembly lines may have to be shut down if workers are infected has some Western companies considering switching production [outside China]," George Wu (
Last week the market speculated that Microsoft had instructed Singapore-based Flextronics International Ltd, contract manufacturer for Microsoft Xbox, to close its assembly line in China's Guangdong Province and switch production to the company's factories in Mexico, Wu said.
Dow Jones Newswires reported that Flextronics spokesperson Nina Posadas said the report was not correct.
The report, however, has hampered public confidence, and many foreign investors have decided to stop buying shares of companies that have concentrated their assembly lines in China, he said.
Low labor costs in China have attracted many of the world's top electronics companies in recent years. About 60 percent of the world's notebook computers and 80 percent of motherboards are made there.
The SARS-inspired cutback in business travel may also delay purchasing decisions.
"Face-to-face communications with manufacturers is important when developing new products," said Abel Wang (
Even though no orders have been shifted to other countries, the possibility will increase if the situation continues to worsen, he said.
"With most orders for the first half of this year having been decided months ago, SARS will have little impact for the short term," Wang said. "But the long-term outlook is blurry ... how the market moves depends on how far the disease spreads."
Another market watcher said the situation is still okay.
"It doesn't seem like it is really affecting production or supply at this moment," Molly Lin (
Based on comments from several electronic makers, as of mid April, production and shipments are on schedule, she said.
Even if Microsoft did switch orders away from China, the impact will be limited since the software giant is a minor player in the electronics sector when compared with Dell Computer, Sony and Hewlett-Packard, Lin said.
Existing manufacturing ties are not easily replaced since it usually takes at least several months for an agreement to be formed on the manufacturing of a new product, she said.
CHIP HANG-UP: Surging memorychip prices would deal a blow to smartphone sales this year, potentially hindering one of MediaTek’s biggest sources of revenue MediaTek Inc (聯發科), the world’s biggest smartphone chip designer, yesterday said its new artificial intelligence (AI) chips used in data centers are to account for 20 percent of its total revenue next year, as cloud service providers race to deploy AI infrastructure to meet voracious demand. MediaTek is believed to be developing tensor processing units for Google, which are used in AI applications. While it did not confirm such reports, MediaTek said its new application-specific IC (ASIC) business would be a new growth engine for the company. It again hiked its forecast for the addressable ASIC market to US$70 billion by 2028, compared
Motorists ride past a mural along a street in Varanasi, India, yesterday.
MediaTek Inc (聯發科), the world’s biggest smartphone chip supplier, yesterday said it plans to double investment in data center-related technologies, including advanced packaging and high-speed interconnect technologies, to broaden the new business’ customer and service portfolios. The chip designer is redirecting its resources to data centers, mainly designing application-specific integrated circuits (ASIC) with artificial intelligence (AI) capabilities for cloud service providers. The data center business is forecast to lead growth in the next three years and become the company’s second-biggest revenue source, replacing chips used in smart devices, MediaTek president Joe Chen (陳冠州) told a media event in Taipei. “Three or four years
AT HIGH CAPACITY: Three-month order visibility on stable customer demand would push factory utilization to between 80 and 85 percent, Vanguard’s president said Foundry service provider Vanguard International Semiconductor Corp (世界先進) yesterday said it is unable to fully satisfy surging demand for chips used in artificial intelligence (AI) servers and data centers, amid an AI infrastructure investment boom that is crowding out production of less advanced chips. Vanguard is facing an “undersupply of chips” made using mature process technologies, due to strong demand for AI products and improving demand from customers in the commercial, industrial and auto sectors, which are digesting excess inventory to a healthier level, company chairman Fang Leuh (方略) told a virtual investors’ conference. However, Vanguard gave a more conservative view on
RSS