Lenovo's Plan to Increase Laptops Manufactured In-house May Impact Taiwanese NB PC Parts Suppliers

Oct 08, 2012 Ι Industry In-Focus Ι Electronics and Computers Ι By Steve Chuang, CENS
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Taipei, Oct. 8, 2012 (CENS)--To maintain its brisk shipment growth, the China-based Lenovo, now the world's No. 2 PC brand vendor by market share, has reportedly planned to invite more local PC parts suppliers to its supply chain and may even venture into parts manufacturing to increase in-house output of laptops. This will likely impact some Taiwanese notebook PC parts producers in the long run, according to industry insiders.

Institutional investors said that about 30-50% of Lenovo's laptops for sale this year will be manufactured in house, with the remainder of which to be outsourced to Taiwan's Compal Electronics Inc., Quanta Computer Inc. and Wistron Corp. Riding on China's fast-growing market, the Chinese vendor is expected to score a 14% shipment growth in 2013 and unseat HP as the world's largest brand in the short term.

Industry insiders indicated that Lenovo, to differ from competitors, has planned to boost in-house production of products ranging from high-end PCs, such as the ThinkPad family, to low-end models.

In the meantime, to lower manufacturing costs, the Chinese brand vendor, which has gradually asked its contract PC producers to use designated parts and components in its laptops, has allegedly considered adding more local smaller-sized suppliers of parts and components to its supplier list. Plus, the brand has yet to rule out the possibility of reinvesting in production of laptop parts and components in the next two to three years. These planned measures, the insiders said, will likely squeeze out some Taiwanese parts suppliers, especially those engaged in connectors and conventional lithium-ion cylindrical batteries, from the brand's supply chain in the near future.

Noteworthily, Lenovo has recently set up a production plant in North Carolina State, the U.S. as the pioneer among Asian brand vendors, which is perhaps part of its plan to increase independent production of laptops. The plant, which costs several million U.S. dollars initially, will start rolling in 2013, with employees of over 100 people. This, market observers opine, will help the Chinese PC vendor to enhance its brand recognition among local consumers.
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