Taipei, May 9, 2008 (CENS)--With China`s investment conditions turning unattractive, Compal Electronics Inc., the world`s second-largest supplier of notebook PCs, plans to set up its new plants in Europe`s Poland and South America`s Brazil to reduce its excessive focus in China, according to Ray Chen, the company`s president.

Compal has applied for building its new plant in Brazil this year, which will initially specialize in repairing notebook PCs. Meanwhile, the firm has also set up another plant in Poland, which is scheduled to be operational in the third quarter of this year. Noteworthy is that the firm has gradually shifted production lines to its Poland plant from an existing one in the U.K. due mainly to prohibitive labor costs in the country.

Besides, suppliers of parts and components for notebook PCs noted that demand for notebook PCs from emerging countries is expected to fuel the growth of the industry, offsetting the sales decline in Europe or the U.S., which have both been heavily hurt by sub-prime-mortgage turmoil. Thus, Dell, a leading brand of notebook PCs in the world, plans to explore the Brazilian market this year, and has actively invited its Taiwanese contract suppliers to build plants there.

In fact, according to Chen, rising labor costs in China and depreciation of greenbacks have worsened the country`s investment climate. Furthermore, he predicted that supply chains in China`s notebook PC industry will most likely collapse because the country wants to upgrade its industries instead of merely manufacturing and assembling products for large-sized international companies. In response to the change, Compal has selected Vietnam to build its new plant since last year, which is scheduled to start mass production nearly next year.

However, Chen stressed that Compal won`t totally withdraw its production lines from China, but will shift production of low-end products to the Vietnam plant as its second-largest manufacturing base in the future.

In addition to Compal, the world`s other leading contract suppliers of notebook PCs, including Quanta Computer Inc. and Wistron Corporation, have all planned to switch their production focus to other countries of the world instead of China.

(by Steve Chuang)