UPDATE 1-Taiwan's Asustek to split up in January

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By Baker Li

TAIPEI, July 2 (Reuters) - Taiwan's Asustek Computer Inc. (2357.TW: Quote, Profile, Research, Stock Buzz), the world's top computer motherboard maker, said on Monday it will split its contract manufacturing from its branded businesses in January to become more competitive.

Asustek also said it would separate its contract manufacturing, or original equipment manufacturing (OEM), into two units: Pegatron, specialising in PC-related equipment, and Unihan, focusing on casing, modules and non-PC products.

The branded business will retain the company's current Taiwan listing and the Asustek name. The two OEM units could also be listed in Taiwan, but the company does not rule out a listing overseas, Chairman Jonney Shih told a news conference.

Taiwan-based firms are currently limited to putting no more than 40 percent of their net value into their China operations -- a limit that has led many manufacturing-focused companies to list in other markets, notably Hong Kong. Asustek had previously announced plans to split its branded and OEM businesses, but had not given a date.

"Asustek is aiming to boost our branded and contract manufacturing businesses. Therefore we are actively restructuring and dividing our work forces based on expertise to increase overall competitiveness," the company said in a statement.

Taiwan's leading PC maker, Acer Inc. (2353.TW: Quote, Profile, Research, Stock Buzz), has also separated its OEM business from its branded business. The branded business subsequently grew into the world's third-biggest PC seller. Investors tend to like the strategy because it allows the branded business to focus on developing consumer markets without having to worry about manufacturing, while the OEM units can focus on manufacturing and seek multiple customers for their products.