Taiwan's last notebook PC production line moved to China

Taiwan's First International Computer Inc. recently closed the island's last notebook PC production line and moved it to mainland China. The company will transform its notebook PC plant in northern Taiwan into a warehouse.

FIC is the last notebook PC producer to switch its production to the other side of the Taiwan Strait, although the company has long insisted on manufacturing the product on the island.

Industry sources said that early this year two first-class notebook PC contract producers, Quanta Computer Inc. and Compal Electronics Inc., announced plans to move their volume-production production lines to mainland China due to cost concerns.

Notebook PC manufacturing was one of the top-10 information technology (IT) and electronics sectors in Taiwan in the past 10 years and currently some eight out of 10 notebook PCs sold in the global market are made by Taiwan companies. Sales of global notebook PCs are expected to reach about 58 million units this year, and over 45 million units will be delivered by Taiwan-based companies.

FIC's production shift marks an official end of the era of "Made in Taiwan" for notebook PCs and a formal start of the "Made by Taiwan" era, notebook PC makers pointed out.

Industry sources said that the advantages held by Taiwanese makers lie only in better cost control, higher delivery efficiency and flexible production, but they have to meet customers’ requirement of cutting prices and suffer the inability to control the prices of key high-level parts, such as the central processors. Accordingly, the exodus is a natural development.

As their notebook PC production bases in mainland China have achieved scale of economy, many Taiwan notebook PC makers have started a series of streamlining projects to cut the number of production-line workers on the island.

Statistics showed that the number of direct production-line workers of Quanta and Compal each ran close to 3,000 in Taiwan between 2001 and 2003. The number sharply dropped to only hundreds after the Taiwanese government lifted the ban on investment by Taiwanese makers of notebook PCs in the mainland. The workforce of Invetec Corp., already dropped to only about 500 in 2003 due to the company's earlier exodus.

Based on financial statements of major Taiwanese notebook PC makers, most of the top-five makers in the line, including Hon Hai, Asustek, Compal, and BenQ registered higher profit margins in China than in Taiwan.

Industry sources explained that the average labor wage in Taiwan is about five times that in mainland China, and that land costs in the other side of the Taiwan Strait is also much lower than that on the island. Jonney Shih, chairman of Asustek, the world's largest computer motherboard maker and a leading notebook PC supplier, said earlier that it is an inevitable trend for Taiwan to cut the labor force in the manufacturing end.

source and copyright: CENS