Quanta Computer Reportedly Contracted by Apple to Assemble iWatch

In the race for Apple Inc.'s contract order for iWatch, Taiwan-based Quanta Computer Inc., the world's largest laptop ODM (original design manufacturer) by shipments, may have pulled ahead of the competition. According to recent reports, it has been contracted to assemble the wearable device.

Foreign news agencies reported that Quanta is now working on trial production of the iWatch, and is expected to kick off mass production in July for around 70% of the total supply of the devices. This year, Apple expects to sell 50 million units of the brand-new product, which is scheduled for worldwide launch in October.

If the reports are true, Quanta Computer will gain considerable growth momentum from supplying the iWatch. This is especially significant at a time when its shipments of laptops and iPods to Apple have gradually declined.

With Quanta Computer filling Apple's iWatch orders, other Taiwanese electronics manufacturers are also likely to benefit by supplying needed parts. These companies include the Advanced Semiconductor Engineering Group (semiconductor testing and packaging), Richtek Technology Corp. (power management ICs), Kinsus Interconnect Technology Corp. (IC carriers), Career Technology (Mfg.) Co. (flexible printed circuits), Merry Electronics Co. (electro-acoustic components), TXC Corp. (quartz crystal products and clock control modules), and Royaltek Co. (GPS systems).

Seemingly immune to the persistent shrinkage of the global PC market, Quanta Computer shipped 10.5 million laptops in the first quarter of this year, up 8.3% compared to a year earlier, and raked in NT$215.83 billion (US$7.19 billion) in consolidated revenue, up 9.29% year-on-year (YoY).

At an investor conference it held in mid-June, the company reported consolidated revenue of NT$70.115 billion (US$2.33 billion) for May, down 3.41% monthly but up 14.8% YoY, adding to its cumulative consolidated revenue of NT$358.535 billion (US$11.951 billion) for the first five months of this year, an improvement of 12.11% YoY.

Based on his observation that global market demand for notebook PCs has gradually recovered, Quanta chairman Barry Lam stressed his confidence that his company will do even better in the second half of this year than the first half.

In addition, Lam continued, his firm will respond to the growing “Computing Will Be 3C” trend by reshaping its operating strategy to put heavier emphasis on the 3R (Re-think, Re-educate and Re-invent) concept, so as to better explore new business opportunities in the so-called 3S (system, software and solution) segment. Its goal is to become the leading provider of system solutions for cloud computing, connectivity, and client devices.

The company's vice chairman, C.C. Leung, emphasized that Quanta Computer's outlook will be even brighter than expected in the third quarter, when the company will gain steam from the back-to-school boom and from increasing shipments of wearable electronics. He declined to confirm, however, that Quanta had actually won Apple's order for the iWatch. (SC)