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Taiwan's Inventec in Chongqing laptop tie-up with HP
March 16, 2009 / 5:05 AM / 9 years ago

Taiwan's Inventec in Chongqing laptop tie-up with HP

* Inventec in talks to build plant aiming to make HP laptops

* Factory’s capacity will be more than 4 mln laptops per year

* Analysts concerned over Inventec expansion

* Shares up 0.4 percent, lagging main board (Adds details, analyst comments, background)

By Kelvin Soh and Roger Tung

TAIPEI, March 16 (Reuters) - Taiwan contract laptop PC maker Inventec (2356.TW) is in talks to build a plant in western China aiming to supply global PC leader Hewlett-Packard (HPQ.N), officials said on Monday.

The factory in the western Chinese city of Chongqing will have capacity to produce more than 4 million laptop PCs every year, said the official at the Xiyong Micro-electronic Park, who would only give his surname as Wang.

He added that talks were in late stages, and land had already been set aside for the project. “If they start construction of the factory by the first half of this year, they can start production by the second half,” he said.

An official at Inventec, the world’s fourth-largest laptop PC maker, had no comment, while an HP spokeswoman was not immediately available.

HP has held talks with Inventec on a manufacturing tie-up at the Chongqing facility, but has not reached any specific deal yet, said an official in HP’s logistics department, speaking on condition his name not be used because he was not authorised to speak for the company.

Inventec’s move comes after HP announced in October it would set up a production base in Chongqing to begin operations in 2010.

Contract manufacturers and other suppliers frequently set up manufacaturing facilities in areas where their clients already have large operations, streamlining logistics and supply chain issues.

Many top PC brands such as HP, Dell DELL.O and Acer (2353.TW) typically carry out their own design work, but outsource the labour-intensive manufacturing to original equipment manufacturers (OEMs) such as Inventec.

Many of these OEMs are headquartered in Taiwan, with Taiwanese contract manufacturers such as Quanta (2382.TW) and Compal Electronics (2324.TW) making more than 80 percent of the world’s laptop PCs.

Some analysts expressed concern about Inventec’s move to set up the factory, saying that any expansion plans at this point might not be a good thing for the company.

“Looking at their factory in Pudong (Shanghai), they’re still having problems there and so I’d be a little concerned about how things go with them in Chongqing,” said KGI Securities analyst Angela Hsiang.

Inventec shares were up 0.4 percent at T$12.65 by 0355 GMT, lagging the benchmark TAIEX's .TWII 1.63 percent advance.

Editing by Jacqueline Wong

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