Manufacturing News

Taiwan's Contract Electronics Makers to Benefit From Freer Outsourcing Atmosphere

Taiwan's top five contract manufacturing groups of electronics products are expected to benefit from Intel's policy of stopping bundling its notebook microprocessors with designated wireless-network modules and some brand-name computer suppliers' decision to delegate the authority of choosing components to their contract suppliers.

For a long time, Intel, which commands over 80% of world's market for computer microprocessors, has demanded notebook-computer manufacturers using its microprocessors to build the processors packed with its designated wireless-network modules into their notebook computers.

Late last year, Intel decided to end the policy, allowing notebook-computer suppliers to buy the modules from other suppliers than its designated ones. Also, some brand-name computer suppliers, based on cost concern, have partly allowed their contract suppliers to determine the sources of components for their systems.

Industry watchers expect the new policies to bring lucrative business to non-designated suppliers as the Hon Hai Group, the Asustek Group, the Quanta Group, the Compal Group and the Wistron Group.

Some market consulting firms estimate annual global shipments of notebook computers to top 200 million this year, which demand roughly the same amount of wireless-network modules. GemTek Technology Co., Ltd. and Universal Scientific Industrial Co., Ltd. have been Intel-designated suppliers of the modules.

Arcadyan Technology, a Compal subsidiary, shipped around five million sets of wireless-network module in 2009. The company estimates its shipments for the year to increase quarter by quarter as its dual-mode modules have been integrated into Compal's notebook computers.

Compal sets its shipment goal for 2010 at 50 million notebook computers, an amount likely to help double Arcadyan's shipments this year.

Wistron's wireless-network module subsidiary, Wistron Neweb Corp., began delivering the modules in the fourth quarter last year to the parent company. Institutional investors estimate the subsidiary to see increasing orders from Wistron this year.

Pegatron Corp., an Asustek affiliate, has turned to subsidiary AzureWave Technologies Inc. for the modules, which helped boost AzureWave's sales by 15% last year.

Hon Hai's wireless module subsidiary, CyberTAN Technology, has received contracts from the parent company.

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