Notebook PC manufacturers Quanta Computer Inc (廣達), Compal Electronics Inc (仁寶), Winstron Corp (緯創), Pegatron Technology Corp (和碩) and Inventec Corp (英業達) are expected to benefit from the decision by Lenovo Group Ltd (聯想) to delegate whole system notebook assembly and shipment to local producers, industry analysts said.
Lenovo will augment its notebook lineup of professional business models, the ThinkPad series, with an increasing focus on regular user-oriented models, the IdeaPad series.
The switch from bare-bone systems shipped to Lenovo, which then assembles them with key components to the new process of having Taiwanese manufacturers assemble and ship whole systems is a complicated deal, said Helen Chiang (江芬韻 ), a research manager at IDC.
Each manufacturer received a different proportion of whole system and bare-bone orders from Lenovo and it is yet to be seen how this proportion will change under the new arrangement, she said.
IDC estimates the average selling price (ASP) of whole systems for manufacturers to be US$400 to US$450, whereas bare-bone systems reach an ASP of US$200 to US$250.
"However, the profit margin in the bare-bone systems production is much higher than whole systems, therefore, a manufacturer's profit margin depends on the proportion of the type of order it receives," Chiang said.
The IdeaPad series, targeted at the vast consumers notebook market, is expected to debut in March next year. The orders will be divided between different Taiwan-based manufacturers, but the new series is not intended to compete in the low priced notebook niche just yet -- which analysts predict will set the trend this year -- said Bruce Sheng (沈汝康), Lenovo public relations manager.
The new arrangement will not affect the share prices of these Taiwan manufacturers very much, said Hsiao Sean-Ryan (蕭文良), an analyst with Fubon Securities Investment Services Co (富邦證券投顧), who pointed out that the profit margins in either whole system or bare-bone orders are low, therefore a manufacturer's revenues may increase, but its profit margin will see little change.
However, Chiang said that the differing circumstances of each manufacturer means that the new arrangement with Lenovo would impact in varying degrees.
Chiang said that, for a company like Pegatron, which had a good client roster in 2005 and 2006 but saw original equipment manufacturer customers decline last year, its biggest customer is parent company AsusTek Computers Inc (華碩), which is estimated to account for more than 40 percent of its orders.
The top priority, therefore, for Pegatron is to expand its customer base.
"Pegatron's main challenge this year is how to attract orders from major notebook brands. Whether it manages to obtain Lenovo orders will be important," she said.
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