Asustek sees battery issues mostly resolved by June

TAIPEI Mon Apr 21, 2008 1:03am EDT

TAIPEI (Reuters) - Taiwan's Asustek Computer (2357.TW) said on Monday it expects most of its battery shortage problems to be resolved by the end of the second quarter, as it maintained its sales target for its popular low-cost PCs.

"Ninety percent of the battery problem should be resolved by June but it could still affect April and May Eee PC sales," said Asustek Chief Executive Jerry Shen, referring to the company's popular line of low-cost PCs.

Last month, Asustek said a global shortage of batteries for computers could affect up to 40 percent of its second-quarter shipments.

A fire in March at LG Chem Ltd (051910.KS) halted the second biggest South Korea battery maker's Ochang plant, but the company said that it expected the factory to start production again in two to three months.

LG Chem is a major supplier of batteries to Asustek and U.S. clients such as Dell DELL.O and Hewlett-Packard (HPQ.N), and competes with Samsung SDI (006400.KS).

Asustek is maintaining its target of shipping 5 million Eee PCs this year, Shen said at a news conference where Asustek launched its new Eee PC with a larger 8.9-inch screen.

Around 60 percent of Eee PCs to be sold in the second half will have 8.9-inch screens, said Shen, whose company sold 1 million Eee PCs between November and March.

At midday, Asustek shares were up 1.9 percent, outpacing the main TAIEX share index's .TWII 0.2 percent gain.

Asustek, also the world's largest motherboard maker, competes with Taiwan's Acer (2353.TW) in its own-brand laptop business and with Hon Hai Precision Industry Co (2317.TW) in its original equipment manufacturer units.

With a market value of about $10 billion, Asustek this year separated its branded business from its contract manufacturing operations, which make laptops for Apple (AAPL.O), Dell, Hewlett-Packard and Lenovo (0992.HK).

(Reporting by Sheena Lee; Writing by Doug Young; Editing by Edmund Klamann)

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