Dell to place more desktop PC contract orders with Taiwan suppliers in 2005

Taipei, Dec. 10, 2004 (CENS)--Dell Computer Corp. of the U.S. has decided to release more contract orders to suppliers in Taiwan next year, including Hon Hai Precision Ind. Co. Ltd., MiTAC International Corp. and Asustek Computer Inc.

Industry sources said that Dell's share of the global desktop PC segment has been rising and the world's No. 1 computer brand plans to release more contract orders to Taiwan suppliers in a bid to strengthen its price competitiveness.

Currently, both Hon Hai, the world's No. 1 maker of barebone PCs, connectors and game consoles, and Mitac, a leading informaton technology (IT) maker in Taiwan, are two major suppliers to Dell. Hon Hai is still the biggest contract supplier to Dell, while Mitac's monthly shipment volume has increased to about 500,000 units now. Dell has also begun cooperation with Asustek, No. 1 motherboard maker in Taiwan, in barebone PC business due to the Taiwan supplier's strong product-design capability.

Some market sources reported that Dell might place complete-machine orders with its Taiwan suppliers, tending to maintain the barebone-shipment cooperation mode with Dell as complete-machine production can hardly generate higher margins.

Industry sources said that most big contract PC suppliers in Taiwan, such as Hon Hai and Mitac, have posted good margins in their desktop PC-production businesses with big international brands due to accumulated profits from material, parts, and mold/die procurement projects.

The semi-official Institute for Information Industry (III) pointed out, however, that Taiwan's desktop PC sector is expected to enjoy not-so-optimistic growth momentum next year due to rising self-production ratios of major customers such as IBM, Fujitsu and Lenovo, though HP and Dell have decided to increase their orders from the island.