Sony Corp may farm out as much as 30 percent of its annual PlayStation 2 video-game console production to three Taiwan companies, part of the No. 2 consumer electronics maker's drive to cut costs, an analyst said.
Sony may give Hon Hai Precision Industry Ltd (
"Neither Hon Hai nor Asustek are able to comment on the project due to non-disclosure agree-ments," Kao said.
"We believe Yageo is well
positioned to get the orders" from Sony, he added.
Sony president Kunitake Ando is trying to save money by paring parts procurement costs, reducing Sony's workforce by offering early retirement and scrapping or scaling back unprofitable businesses.
"It is true that we are considering [a lot of options] regarding PlayStation 2 production in China," such as where to make the game machines and how much production we will base there, said Koichiro Katsurayama, a spokesman at Sony Computer Entertainment Inc, Sony's game unit.
"At present, we have nothing specific to say about placing orders," Katsurayama added.
Sony last week said it plans to cut its component suppliers in Japan by 1,500, or 60 percent, seeking cheaper parts from China, Taiwan and Malaysia.
It aims to cut component purchase costs by more than 15 percent, saving about ?300 billion (US$9.7 billion) a year.
The Taiwan companies "have a great chance to obtain the order," said Steven Hsieh, a fund manager at Dresdner Asset Management Taiwan Ltd.
"If you are Sony where can you outsource except Taiwan?" he asked.
Asustek, Hon Hai and Yageo make up 14 percent of the NT$1.9 billion (US$29 million) Hsieh manages in Taiwan equities.
Asustek may make the motherboards for PlayStation 2 while Hon Hai will make the casing and major components, Kao said in his note, adding Yageo will make resistors and other passive components.
The orders may mean annual revenue of up to NT$26 billion (US$751 million) a year for Hon Hai, Goldman estimated. Asustek may get up to NT$15 billion ($434 million) of revenue, the analyst said.
The order would represent up to 20 percent of Hon Hai's annual revenue and up to 18 percent of Asustek's, Kao forecast.
"I doubt the Goldman forecast," Hsieh said. "Final demand for PlayStation 2 isn't clear."
Sony chairman Nobuyuki Idei said this week the maker of the Sony Walkman and Vaio computer is sticking to its 20 million PlayStation 2 shipment goal in the 12 months ending March 31 despite last month's terrorist attacks in the US.
Some analysts and investors have said parents, fearing the sometimes violent content of game software, may be less inclined to buy video-game machines in the wake of the attacks.
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