Elitegroup phases out branding to focus on contract manufacturing

Elitegroup Computer Systems Inc., one of Taiwan's first-tier motherboard manufacturers, has resolved to phase out notebook computer branding operation to focus on contract manufacturing.

Elitegroup is Taiwan's first motherboard manufacturer get involved in the production of NBs. But the harsh competition in the NB market worldwide has forced it to change production strategy. A few years ago, the company took advantage of the data processing unit used in desktop computers to develop 'Desknote' less expensive own-brand notebooks with no attachment of battery, successfully drawing market attention at that time.

Because of the change in production strategy, Elitegroup has downward adjusted the shipment goal of NBs to 600,000 units from one million projected in the beginning of this year. In the first seven months the company shipped 310,000 NBs.

A few years ago, first-tier local motherboard manufacturers, including Elitegroup, Asustek Computer Inc., Gigabyte Technology Co., and Microstar International Co., expanded their business scopes to include NB branding and contract manufacturing to cash in on the fast-growing NB market.

But in recent years, some big names of NBs, including Dell Computer, Hewlett Packard, Lenovo, Toshiba, and Acer, have launched price competition to vie for bigger market shares, which has impacted the deployment of motherboard manufacturers in the NB market.

To get rid of harsh competition from big names, Elitegroup has decided to lean toward contract manufacturing and vie for the contract orders placed by mainland Chinese brands. The company said it is now having talks with several mainland NB brands for contract manufacturing.

Elitegroup predicted it would ship 20 million motherboards, half of which will go to contract production. In the past the company saw shipments of own-brand motherboards account for over 70% of its total shipments.

source: CENS