When founding Quanta Computer Inc (
This was a bold move, considering that the 1980s was the age of the rise of desktop computers, especially with IBM Corp betting heavily on their desktop machines to be tomorrow's stars.
"People laughed at us and viewed Quanta's first portable products as a piece of junk at that time," Lam said at a Jan. 5 media roundtable on Taiwan's competitiveness.
But the contempt did not deter Quanta's determination to pursue laptop production, and the firm's far-sightedness has turned it into the world's largest notebook contract maker, with volumes hitting around 18 million units last year. The company's customers include computer vendors such as Apple Computer Inc, Dell Inc, Hewlett-Packard Co, Matsushita Electric Industrial Co and Sony Corp.
No bed of roses
However, the notebook production business is not a bed of roses for Quanta, as it is faced with the issue of lower margins, along with other makers.
"In fact, most notebook contract makers are now posting much lower profit margins than the 5 to 6 percent reported. A five-percent margin is already a good deal to most," said Albert Chen (
This probably challenges makers to think of their next "winning formula," and Quanta is no exception.
"What's next after notebooks? Computers are only accessible to fewer than 20 percent of the world's population. How can we provide different forms of devices to make mobile computing possible to most?" Lam asked.
This probably explains the rationale behind Quanta's participation in the "One Laptop per Child" project.
Launched in January last year by Nicholas Negroponte, chairman and co-founder of the Massachusetts Institute of Technology's Media Lab, the scheme aims to develop computers for children around the world priced at US$100, far lower than the current cheap notebooks sold at US$500.
While industry watchers question the viability of the project, which is set to churn out 5 million to 15 million units of budget laptops by the end of this year, Quanta seems to be unperturbed and is again convinced that it is on the right track.
Quanta is just one of the cases where local PC makers are attempting to diversify into new market segments, or "blue oceans," to maintain future competitiveness.
"Blue ocean strategy," a hot term in Taiwan's IT industry last year, refers to competition in an uncontested market space, while companies adopting "red ocean strategy" are those competing in an existing market and undercutting each other as most do now.
Acer Inc also realized that instead of concentrating all its efforts on the contract manufacturing business, it should dip into the blue ocean for growth.
The company, founded 30 years ago, thus spun off its manufacturing operations in 2000 to focus on globally marketing its brandname products including desktop and portable computers.
The efforts bore fruit last year as Acer successfully became the world's fourth largest branded computer maker, pushing it one step closer to joining the top-three club next year.
What consumers want
However, understanding what consumers really want is the toughest job for contract makers venturing into brandname business, as they have long been designing and manufacturing products based on clients' requirements, said Simon Yang (
"They need to enhance after-sales services to listen to consumers' voices, and focus on various markets with smaller volumes as a start," Yang said.
By dedicating resources to more markets, the volumes added up in total would be significant, which would help to boost a company's market share, Yang added.
In addition to adopting a "blue ocean" strategy, Taiwanese makers have been quick to relocate assembly lines offshore, including to China, to improve margins, taking advantage of the lower labor and production costs there.
Last year, First International Computer Co (
"Now, over 90 percent of Taiwanese notebook production is being churned out in China," MIC's Chen said.
Shipments of notebook computers are expected to climb 18 percent to US$35.8 billion this year, according to the institute's forecast.
But the heart of their research and development (R&D) remains in Taiwan, at least for now.
"However, we see the trend of R&D moving gradually to the mainland over these few years, depending on the maturity of the engineers there," Chen added.
A case in point is the nation's largest laptop maker Asustek Computer Inc (
Quanta's Lam said that the number of local engineering graduates every year is insufficient to deal with the industry demand and that companies have to turn to China.
"But the quality of local engineers here is still better compared to their Chinese counterparts," Lam said.
In Chen's opininon, it is irrelevant whether notebook manufacturing or R&D is done locally or offshore because it is not equivalent to the competitiveness of the industry.
"Companies will eventually find their own `blue ocean strategy' to embrace the competition, as they always did in the past," he said.
TECH CLUSTER: The US company’s new office is in the Shalun Smart Green Energy Science City, a new AI industry base and cybersecurity hub in southern Taiwan US chip designer Advanced Micro Devices Inc (AMD) yesterday launched an office in Tainan’s Gueiren District (歸仁), marking a significant milestone in the development of southern Taiwan’s artificial intelligence (AI) industry, the Tainan City Government said in a statement. AMD Taiwan general manager Vincent Chern (陳民皓) presided over the opening ceremony for the company’s new office at the Shalun Smart Green Energy Science City (沙崙智慧綠能科學城), a new AI industry base and cybersecurity hub in southern Taiwan. Facilities in the new office include an information processing center, and a research and development (R&D) center, the Tainan Economic Development Bureau said. The Ministry
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US
The Taipei International Cycle Show (Taipei Cycle) yesterday opened at the Taipei Nangang Exhibition Center, with the event’s organizer expecting a steady recovery in the industry this year following a tough last year. This year, 980 companies from 35 countries are participating in the annual bicycle trade show, showcasing technological breakthroughs and market development trends of the bicycle industry at 3,600 booths, the Taiwan External Trade Development Council (TAITRA, 外貿協會) said in a statement. Under the theme “Ride the Revolution,” the exhibition has attracted more than 3,500 international buyers from 80 countries to preregister for the four-day event, which is expected to
RSS