Compal Decides to Lay Off Over 100 Employees in Tablet PC Division

Following the footsteps of its Taiwanese counterparts, Inventec Corp. and Quanta Computer Inc., Compal Electronics Inc., a large-sized global contract manufacturer of electronic devices, announced its decision last week to lay off of over 100 employees in the tablet PC business division, about 2% of its total workforce in Taiwan.

Lackluster sales of Android tablet PCs, Compal's spokesperson Gary Lu said, forces his company, which had actively expanded its production lines in the past year to bet on the Android league, to downsize the business unit. But, Lu stressed, Compal will keep producing such devices in the future after the downsizing.

Institutional investors indicated Qaunta, Compal's major rival, has snapped up nearly all orders for hot-selling non-iPad tablet models, such as Amazon's Kindle Fire and Google's Nexus, which is also among the reasons behind Compal's planned layoff, perhaps the straw breaking the camel's back. Presently, Compal's major tablet PC customers are Acer and Lenovo, with the former, however, struggling to counter sales downturns so far this year and the latter inclined to increase in-house production to cut contract orders.

The investors added that without big orders, Compal's annual shipment of tablet PCs is estimated at only 2 million units this year, far less than 10 million units by Quanta.

To survive the competition, Compal may switch tablet PC production to Windows 8 from Android, as the manufacturer has allegedly been dedicated to developing Windows 8 models since early this year. Therefore, most of the remaining employees at its tablet PC department following the planned layoff will be R&D engineers of Windows 8 models, according to industry insiders.

Inventec and Quanta severed 432 and nearly 1,000 employees, respectively, in their tablet business units in the fourth quarter of 2011, due mainly to withdrawal of customers in the segment after being bested by Apple Inc. with its iPad.

source & copyright: CENS