Arima refuses to bid on HP`s new notebook orders

Arima refuses to bid on HP`s new notebook ordersAccording to sources, Arima Computer has refused to bid on Hewlett-Packard’s (HP) new notebook models, codenamed Martin and Square, because of HP’s unreasonably low price expectations.Some first-tier Taiwanese notebook makers joining the bid indicated that HP was looking for manufacturers willing to provide quotes under US$700. These makers said that the current lowest quotes for notebook are US$750-800 and that the price HP is looking for is unreasonably low. For Arima, such a low price could not be achieved profitably and the company decided to withdraw from the bidding, sources added.Last year, in order to land orders from HP and meet its requirement of high-end models with a low-end price, Arima’s profit margin dropped to 1.9% in the third quarter, and caused its pre-tax profit to slide from NT$166 million in 3Q 2001 to a loss of NT$155 million in 3Q 2002, while HP’s third quarter profit grew by 300% year-on-year.As the Presario 900 series is phased out, Martin and Square will join the consumer-level Presario and Pavilion series. The projected shipments of the new models will exceed one million units in their first year. Rumors suggest that Compal has secured the orders and shipments will begin in the second quarter. Sources said that these models would be differentiated by their CPU brands, with one model adopting Intel and the other AMD.Presario 900 notebook orders have been a major part of Arima’s business over the last two years. Although Arima claimed that the Presario 900 sold well, shipments of this model will end in around June or July. Withdrawing from the bid means that Arima will have no orders from HP in the second half of this year. The loss of HP’s orders could drag down Arima’s estimated shipments of 1.8 million notebooks last year to between one million and 1.2 million units this year, pushing Arima out of the top five notebook manufacturers in Taiwan. In this scenario, NEC will become Arima’s most important client.Taiwan’s new top 5 notebook manufacturers (FIC replaces Arima)Company...................................2003 shipmentsQuanta Computer....................................6.5Compal Electronics.................................6.0Wistron..................................................3.0Inventec.................................................2.5First International Computer (FIC).............1.8Source: compiled by DigiTimes, January 2003