Quanta shifts phone focus to PDAs and smartphones

Quanta Computer Inc (廣達電腦), the world's biggest notebook computer contract maker, said yesterday it has shifted its strategy in making cellphone products by focusing on personal-digital-assistant (PDA) phones and smartphones.

Instead of manufacturing a wide variety of mobile phones, the company will now focus only on PDA phones and smartphones, which offer better margins, Jason Lin (林群傑), director of the strategic investment division, said in a telephone interview.

Lin refuted a Chinese-language Commercial Times report which said Quanta would begin phasing out its handset contract manufacturing business after the middle of next year.

"It is untrue to say that we are leaving the handset business," he said.

Quanta once produced as many as 6 million handsets a year, with Panasonic as its biggest client, after it entered the market in 2000.

But it has failed to attract more clients and its handset production has been declining, the newspaper said.

Quanta shipped only 2 million handsets last year - accounting for about 2 percent of its total revenues - and shipments will remain flat this year, Lin said.

Last November the company said it would ship 3 million units this year.

The Commercial Times also reported that 20 or so researchers in Quanta's handset division had recently left the company.

Lin acknowledged the turnover, but said it was common practice in the high-tech industry for some staff to resign after receiving their year-end bonuses.

Quanta has reiterated that it will continue to diversify into non-notebook computer manufacturing. It has said that non-core businesses - including mobile phones, liquid-crystal-display TVs, automotive electronics, servers and storage products - are expected to account for 25 percent of total revenues this year, up from 20 percent last year.

The figure is set to rise to 30 percent next year, it said.

In other developments, Merrill Lynch issued a caution to investors last Friday, advising them "not to chase stocks related to the One Laptop per Child [OLPC] story."

Quanta is the sole manufacturer of these budget laptops, which will be mass produced later this year for emerging markets, priced at US$150.

The affordability is made possible by going for cheap material costs and excluding distributors.

"Investors should not look at related companies too seriously, as the optimism on OLPC might turn out to be hype," Merrill Lynch said in its report.

It added that the OLPC business model might be workable in its initial stages, but users would face problems when they need maintenance help, software debugging or updates, or help in handling viruses.

Quanta's shares closed down 5.2 percent to NT$51.2 on the Taiwan Stock Exchange yesterday.

source: Taipei Times