Nov 12, 2001

A high-ranking executive in Dell's Asia Pacific procurement division said Dell is confident of its performance in 2002, and although the global economy remained sluggish, a shake-up was possible in the wake of the merger plans of Hewlett-Packard Co. and Compaq Computer corp., and the continued U.S.-led military action in Afghanistan, Taiwan economic news sources report.

In order to lower manufacturing costs in line with falling prices in the PC industry, Dell will increase contract manufacturing orders. Dell has purchased US$5.5 billion so far this year in Taiwan. With the expected procurement increases, Dell's purchases may reach US$6.6 billion next year in Taiwan.

The executive was quoted as saying that Dell's business would profit following the Sept 11 attac. More and more US companies are encouraging their staff to work at home, a policy that would stir up demand fro Dell's notebook computers.

The news that Dell will increasingly place orders in Taiwan will bolster companies like Quanta, Compal and Wistron and has raised their hopes that their performance will take off on the back of new orders from Dell, especially for notebook computers

Shrugging off the stagnation in the PC market, Dell has regained the initiative on the strength of its special build-to-order marketing strategy and low-price tactics.

In related news, Mitac International Corp. reportedly has won orders from Dell to provide desktip PCs on an "ready-made-PC" basis instead of the current "build-to-order" mode. Mitac assembles the batch of desktop PCs in China, thereby significantly reducing manufacturing costs. Dell’s order, expected to be worth 10billion Taiwan-Dollars in total, is expected to be helpuful for local information technology companies to weather the present economic slowdown.

HP to slash number of desktop PC suppliers

The merger of Hewlett-Packard and Compaq Computer is likely to sharply slash the number of IT suppliers in Taiwan for HP. according to insider sources. HP and Compaq purchased a combined US$12 billio worth of IT products from Taiwan in 2000.

At the time of the merger announcement, some industry analysts had thought that this procurement would continue increasing, following the merger of the two giants.
However, an executive of HP in Taiwan said the company's desktop computer designing center in France has decided to sharply cut HP's suppliers in Taiwan and Korea from the present 20 to just seven or eight companies. He revealed that this figures might even be reduced to three or four firms.

After reduction in the numbe of desktop PC suppliers, HP will still maintain a level of procurements from these companies but will also demand higher quality and more efficient delivery to end users to cut HP's transportation costs. The new strategy is designed to slash costs in coping with the global business slowdown, decreased demand from customers, and stiffer competition on the market.

Apart from desktop PCs, HP's orders for notebook PCs from existing Taiwan supplirs will remain intact, with Quanta Computer and Compal Electronics being the main OEM contractors for HP.