Korea-based notebook brand vendor Samsung Electronics has reportedly contacted Taiwan-based notebook makers Quanta Computer, Compal Electronics and Pegatron Technology in August to evaluate the possibility of outsourcing notebook orders, according to sources from upstream supply chain, which added that there might be a result soon and Samsung may outsource a small volume of orders to these players.
The sources added that Samsung’s actions seem like it is already in preparation to take up Hewlett-Packard’s (HP’s) PC business.
The sources pointed out that Samsung’s notebooks are all manufactured at its plants in China, although the company had made contacted Taiwan-based notebook makers several times about outsourcing orders before, there was no result. However, Samsung, earlier this month, invited Quanta, Compal and Pegatron to its headquarters in South Korea with a rather cautious attitude, which the sources believe was an indication that Samsung might be already in preparation for expanding its business.
The sources pointed that the Taiwan’s notebook OEM industry’s production efficiency and cost control is currently unmatched worldwide; therefore, if Samsung takes over HP’s PC department, HP’s over 40 million PC shipment volume will still need to depend on Taiwan OEMs. However, related suppliers of components such as panel, memory and battery may be affected as Samsung has a rather strong vertical integration supply chain.
Within HP’s 40 million units of PC orders in 2011, Quanta will ship 20 million units with Foxconn Electronics (Hon Hai Precision Industry) to ship eight million units, Inventec, seven million units, Wistron, 3-4 million units and Compal, two million units.
The sources pointed out that if HP’s PC business is sold to other brand players, makers such as Quanta, Foxconn and Inventec are expected to see the most impact as they have higher order proportions with HP, while Wistron and Compal are expected to benefit.
Commenting on the event, Quanta pointed out that since the information is still limited, the company can only monitor the outcome carefully; however, since the new PC orders from HP for 2012 are all already set, it is unlikely to have significant changes. However, if Samsung takes down HP’s 40 million units of PC shipments and with Samsung’s own 10 million units, the company will need to ship 50-60 million units totally in one year and will definitely need to find OEM partners as Samsung itself may have difficulty to make all these orders, Quanta noted.
However, Quanta will continue to work on cloud computing and the related products in the future to increase its non-notebook business’ contribution.
Meanwhile, Inventec pointed out that HP’s announcement seems like is for testing the market’s reaction and believes that whether HP will sell the business will still depend on the market’s feedbacks. In addition, since HP is given up its PC business because of the weak profitability of consumer notebooks, Inventec, which is manufacturing mainly HP’s enterprise notebooks, expects to only see a limited impact from the event.