Even as Lenovo Group's (
"The acquisition is a definite win for Lenovo," International Data Corp (IDC), a Framingham, Massachusetts-based research institute, said in a report released yesterday.
Benefits
"With its acquisition of IBM's PCD [Personal Computing Division] Group, Lenovo gains access to regions outside of China with a well-respected business partner and a highly established brand," IDC said.
Lenovo, however, will face three challenges: a lack of brand recognition outside its home market, the need to match aggressive pricing in the PC market, and integration issues, including cultural issues as the US and Asian entities merge, IDC said.
Those concerns loomed large yesterday, at least, as investors and analysts appeared to be have a less confident view of the company's future.
Investor Concerns
Lenovo's shares fell yesterday on the first day of trade since the company announced the US$1.75 billion purchase of Big Blue's PC business. Trade had been suspended for the three days previous while the deal was in the works.
The shares fell by as much as 7.48 percent to HK$2.475 before recovering slightly to close at HK$2.575, a drop of 3.74 percent.
"Computers are a sunset industry," said Trevor Cheung, strategist at Singapore-headquartered DBS Vickers Securities.
"We're quite skeptical about the deal. Lenovo has not shown a good track record in assimilation in business development," he said.
JP Morgan Chase & Co also expressed concern over the deal, saying it may take time for Lenovo to merge its business with IBM's.
The purchase is "a bold but risky move," Johnny Chan, a JP Morgan analyst, wrote in a report yesterday. IBM's business "has dipped frequently into the red," he wrote.
Effects in Taiwan
In Taiwan, the Lenovo-IBM deal may deal a heavy blow to Taiwan's information technology industry. Analysts said the impact will be comprehensive over the long term.
While short-term effects are not expected to be serious, as IBM's orders to Taiwan contractors are already due, analysts said that the long-term impact will be unavoidably severe -- with secondary companies being hurt the most.
Second-tier firms could face a loss of contracts and lower gross margins given Lenovo's greater scale and increased bargaining power.
Motherboard Makers
On Taiwan's bourse, share prices of two major motherboard makers -- Elitegroup Computer Systems Co (
EliteGroup surged 6.9 percent to NT$17.1 and Micro-Star rose 6.8 percent to NT$20.4.
Current suppliers for IBM acknowledged that the negative elements of the deal outnumber the positive effects for them. Shares in Wistron Corp (
Also see story:
CHIP RACE: Three years of overbroad export controls drove foreign competitors to pursue their own AI chips, and ‘cost US taxpayers billions of dollars,’ Nvidia said China has figured out the US strategy for allowing it to buy Nvidia Corp’s H200s and is rejecting the artificial intelligence (AI) chip in favor of domestically developed semiconductors, White House AI adviser David Sacks said, citing news reports. US President Donald Trump on Monday said that he would allow shipments of Nvidia’s H200 chips to China, part of an administration effort backed by Sacks to challenge Chinese tech champions such as Huawei Technologies Co (華為) by bringing US competition to their home market. On Friday, Sacks signaled that he was uncertain about whether that approach would work. “They’re rejecting our chips,” Sacks
NATIONAL SECURITY: Intel’s testing of ACM tools despite US government control ‘highlights egregious gaps in US technology protection policies,’ a former official said Chipmaker Intel Corp has tested chipmaking tools this year from a toolmaker with deep roots in China and two overseas units that were targeted by US sanctions, according to two sources with direct knowledge of the matter. Intel, which fended off calls for its CEO’s resignation from US President Donald Trump in August over his alleged ties to China, got the tools from ACM Research Inc, a Fremont, California-based producer of chipmaking equipment. Two of ACM’s units, based in Shanghai and South Korea, were among a number of firms barred last year from receiving US technology over claims they have
BARRIERS: Gudeng’s chairman said it was unlikely that the US could replicate Taiwan’s science parks in Arizona, given its strict immigration policies and cultural differences Gudeng Precision Industrial Co (家登), which supplies wafer pods to the world’s major semiconductor firms, yesterday said it is in no rush to set up production in the US due to high costs. The company supplies its customers through a warehouse in Arizona jointly operated by TSS Holdings Ltd (德鑫控股), a joint holding of Gudeng and 17 Taiwanese firms in the semiconductor supply chain, including specialty plastic compounds producer Nytex Composites Co (耐特) and automated material handling system supplier Symtek Automation Asia Co (迅得). While the company has long been exploring the feasibility of setting up production in the US to address
OPTION: Uber said it could provide higher pay for batch trips, if incentives for batching is not removed entirely, as the latter would force it to pass on the costs to consumers Uber Technologies Inc yesterday warned that proposed restrictions on batching orders and minimum wages could prompt a NT$20 delivery fee increase in Taiwan, as lower efficiency would drive up costs. Uber CEO Dara Khosrowshahi made the remarks yesterday during his visit to Taiwan. He is on a multileg trip to the region, which includes stops in South Korea and Japan. His visit coincided the release last month of the Ministry of Labor’s draft bill on the delivery sector, which aims to safeguard delivery workers’ rights and improve their welfare. The ministry set the minimum pay for local food delivery drivers at
RSS