Lenovo to buy more from Taiwanese firms

Lenovo Group Ltd (聯想), the world's third-largest computer maker, plans to purchase more laptops from Taiwanese manufacturers this year to cope with the growing demand for its products, the company's chairman said in Taipei yesterday.

Lenovo, headquartered in New York after acquiring IBM's PC arm last April, is outsourcing production to Taiwanese manufacturers, including Quanta Computer Inc (廣達) and Compal Electronics Inc (仁寶), to reduce costs.

"I believe the business with Taiwanese companies will grow year by year as long as Lenovo can expand its position in the world," Lenovo chairman Yang Yuanqing (楊元慶) said after giving a speech.

"This year will definitely be better than last year in terms of revenues," Yang said without giving a detailed forecast.

Lenovo has built up close partnership with Taiwanese companies in recent years because local suppliers play a major role in the computer industry's supply chain, Yang said.

Lenovo's global PC market share expanded to 7.7 percent in second quarter of this year, compared to 7.7 percent from 6.4 percent in the first quarter and 7.5 percent a year ago, according to market researcher International Data Corp.

Last year, Lenovo purchased more than US$2.5 billion worth of electronics, primarily computers, from manufacturers in Taiwan, making it one of the top eight foreign buyers, according to government statistics.

That figure did not include purchases made by IBM, which placed orders worth between US$4 million and US$2.5 billion last year, the statistics show.

In total, foreign electronics companies bought about US$66.1 billion worth of electronics made by Taiwanese firms last year and the government expects sales will top US$70 billion this year.

Lenovo, found in 1984 by 11 engineers in Beijing, said earlier this month that its net income fell almost 90 percent to US$5 million during the fiscal first quarter ending in June, from a year ago.

Shipments rose 12 percent from a year earlier, it said without providing specific number. Revenue jumped 38 percent year-on-year to US$3.48 billion.

The increase in revenue bode well for China's biggest computer maker, Yang said, as most companies post a decline in the first year or two after a merger.

Yang said the company is entering the second-stage of integration, or the fusion of different corporate cultures, after smoothly integrated product lines and processes over the past 16 months.

The initial success may ease widespread skepticism about whether Lenovo could be a pioneer among Chinese companies trying to transform themselves into a global brand by acquiring Western brands, he said.

source: Taipei Times