Samsung Electronics will lose its only contract notebook client, Dell, next year, industry sources revealed yesterday.

Samsung’s Taiwan office declined to comment on the report, while Samsung’s Digital Media Business, which is in charge of the company’s notebook business, did not respond at the time of publication.

The Korea company started making notebooks for the US computer giant in the third quarter of 2001, and at that time, they signed a four-year US$500 million contract for component purchases, sources with Taiwan notebook makers said.

Samsung currently makes Dell’s high-end ultralight 12.1-inch Latitude X1 model, but the US vendor has awarded Quanta Computer the contracts for the Latitude X1’s follow-up models, the sources said.

The two companies’ contract-notebook relationship is set to terminate in the second half of 2006, the sources said.

Samsung’s strength is making ultralight notebooks, and with its design capabilities and component supply channel, it appeared to be a strong candidate to check Taiwan’s growing domination of the contract notebook market.

However, fierce pricing from Taiwan makers has driven margins down to levels that make profits difficult, which has forced Samsung and fellow Korean-based firm, LG Electronics, out of the notebook OEM/ODM business.

Last year, LG ended its eight-year-long notebook contract-making relationship with IBM, and it did not receive any new notebook contracts this year from another major client, Hewlett Packard (HP).

Samsung is expected to focus on marketing its own-brand notebooks, with the aim of becoming a world leader in the ultralight segment, the sources said.