Compal Electronics Co (仁寶) has reportedly joined Apple Inc’s Apple Watch supply chain and is likely to start shipments in the second half of this year, challenging Quanta Computer Inc’s (廣達) position as the product’s sole assembler, the Chinese-language newspaper Digitimes said yesterday.
Quanta has been the sole assembler of Apple Watch’s first and second-generation series since the US company unveiled its smartwatch in September 2014.
While Quanta has secured 100 percent order allocation for the next-generation Apple Watch, which is expected to be released in the second half of the year, Compal will be sharing the production load for the second-generation series, Digitimes said, citing sources in upstream supply chains.
To prepare for the manufacturing of Apple Watch in the second half, Compal has moved its smart devices manufacturing equipment from its Chinese plants in Nanjing and Kunshan to Chongqing, the report said.
By taking up the smartwatch orders, Compal can better utilize its capacity at the Chongqing plant, which has been affected by declining orders for notebook computers, the report said.
Compal’s investor relations declined to comment on the report.
Quanta said it does not comment on matters related to its client.
Compal is the world’s second-largest contract notebook manufacturer by shipments.
Sales contribution from PCs, including notebooks, accounted for 73 percent of its total revenue of NT$766.81 billion (US$25.1 billion) last year, company data showed.
As notebook shipments dropped 8.39 percent to 36 million units last year from 39.3 million units the previous year, Compal has stepped up its diversification efforts by venturing into Internet-of-Things (IoT) devices, such as smartwatches and other wearables.
“Smartwatches and wearables will be one of the main growth engines for Compal this year,” company president Ray Chen (陳瑞聰) told investors on Tuesday last week.
Compal shipped 5.4 million smart devices last year, including smartwatches, and aims to double shipments to between 10 million and 12 million units this year, he said.
Revenue contribution from non-PC businesses is expected to rise from 27 percent last year to 31 percent this year, he forecast.
Apple sold an estimated 11.9 million Apple Watches last year, accounting for 49 percent of global smartwatch shipments, research company Canalys’ data showed.
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