Accton's new manufacturing deal with NatSteel Electronics of Singapore will help the networking equipment maker increase its revenues by 40 percent next year, an Accton executive said yesterday.
"Revenue in 1999 will be around US$300 million and will rise roughly 40 percent next year," predicted Gavin Chou, marketing manager of Accton, which is one of Taiwan's largest producers of network interface cards, switches and hubs.
The company's revenue last year was US$197 million.
"The NatSteel deal is a good development," said Jovi Chen, an industry analyst at China Securities. "Accton is trying to get more OEM [Original Equipment Manufacturer] orders, but currently they are running at almost full capacity. "
Accton products will not begin rolling off NatSteel production lines in volume until early next year.
"We have to teach them how to manufacture networking products," Chou said. "They haven't had experience in this field."
The deal, announced earlier this month, will give Accton a worldwide manufacturing foothold, with local access to NAFTA and the European Community.
"We have manufacturing sites in Taiwan, in Shenzhen in China -- and now we have the cooperative deal with Natsteel.
They have worldwide manufacturing sites in Mexico, Hungary, Europe, Malaysia, Indonesia and mainland China," Chou said.
Accton is already running at full capacity in Taiwan, he said, but Shenzhen still has room for expansion, with products aimed at China's burgeoning domestic market.
This year, 80 percent of Accton's products have been made in Taiwan, with the remainder coming from Shenzhen. Chou said it was difficult to predict the precise proportions for next year, but said much of the roughly 40 percent revenue growth he predicted would come from NatSteel's production lines.
Accton's main rival in Taiwan is D-Link, Chen said, but the "two companies actually have a geographic differentiation ... D-Link is bigger in the US market, Accton in OEM and in the European market. Recently D-Link is getting more aggressive in the OEM market, but it takes time for them to establish a relationship with new customers."
Accton is different from other Taiwanese networking players, Chou said. "Our product mix is very healthy.
"About one-third is network interface cards, hubs one-third and switches one-third."
Other companies, he said, have a dangerous overexposure to some product areas.
Accton is trying to move into other markets within the networking sector, Chou said. New product areas include wireless networking, low-speed home and small office networking, Asynchronous Digital Subscriber Line products and cable modems. Accton does not make analog modems, Chou said, because margins are too low.
The company said it has has no plans currently to make convergence products, such as set top boxes.
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