Quanta, the world's largest notebook-computer maker, is on course to produce about 10 million notebooks this year, of which 75 percent will be made in China, said executive vice president Michael Wang.

The company, whose biggest customers include Hewlett-Packard and Dell is moving production to cut costs as its US customers demand lower prices.

Quanta is increasing manufacturing in China after completing a plant in Shanghai's Songjiang Industry Park, where labor, electricity, tax and government fees account for only 5 percent of the total costs, Wang said.

"Taiwan's computer makers' profit margins are still under pressure as cheap manufacturing bases in China have caused overcapacity in the industry," said Phil Chen, who manages Grand Cathay Securities Investment Trust Co's  US$46 million High-Tech Fund.

Lower prices are paring profit margins at Quanta and rivals such as Compal Electronics , the world's No. 2 notebook maker.

Quanta's gross profit margin fell to 5.7 percent in the second quarter from 7.8 percent a year ago. Second-quarter profit rose 60 percent to NT$3.2 billion on a 95 percent rise in sales to NT$65.3 billion, the company said.

Dell, the world's second-biggest PC vendor, last week slashed prices on some products by as much as 22 percent, a day after No. 1 Hewlett-Packard said the company's PC division lost money in the second quarter by cutting prices too deeply.

Quanta was the last of Taiwan's notebook makers to move production to China, building its first plant in March 2001.

"We have created the world's biggest notebook computer production site in China," Wang said. "We have reproduced our Taiwan business model in Shanghai."

Quanta started this year shipping notebooks from its Songjiang factory directly to end-users in the US and Europe, cutting inventory costs for clients such as Dell and Hewlett-Packard.

The company plans to open its first US service center in Nashville, Tennessee, this year, Wang said.

By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved