Hon Hai to enter contract notebook PC business -report

TAIPEI, May 19 (Reuters) - Taiwan's top electronics maker, Hon Hai Precision Industry Co (2317.TW), will soon enter the notebook contract manufacturing business, looking to take a piece of the fast-growing sector, local media reported on Monday.

Hon Hai will join the business next year, the Commercial Times quoted company chairman Terry Gou as saying, putting it in direct competition with local players such as Quanta Computer (2382.TW) and Compal Electronics (2324.TW), the world's two largest contract laptop makers.

Hon Hai counts Apple (AAPL.O), Hewlett-Packard (HPQ.N), Dell (DELL.O), and Nokia (NOK1V.HE) as major clients. In the past the firm made mostly computer components, MP3 players, game consoles and mobile phones, as well as some desktop PCs.

A Hon Hai spokesman declined comment.

"Hon Hai has been preparing to do this for many years, and it's not new news," said Daiwa Institute of Research analyst Calvin Huang.

"But they are still lacking in design capability and we have not seen them land any big (contract manufacturing) projects yet, so I don't see any impact to the other players," he added.

Shares of Quanta and Compal had dropped 0.76 percent and 1.22 percent, respectively, by 0155 GMT, while shares of Hon Hai were down 0.55 percent, reversing gains made earlier in the session. The benchmark TAIEX index rose 0.23 percent. (US$1=T$30.5) (Reporting by Sheena Lee; Editing by Anne Marie Roantree)