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Taiwan laptops build new phase

Taiwan's notebook industry continued to grow in the first half of 1997, consolidating a new phase of development.

Taiwan's notebook industry continued to grow in the first half of 1997, consolidating a new phase of development, although sales still failed to meet earlier, optimistic projections.

Taiwanese firms grew in double-digit figures in 1997 as they continued to produce name-brand notebooks for Compaq, Dell, Sharp, and Fujitsu.

But hopes for passing Japan to become the world's largest producer of portables do not look like they will materialize this year.

Taiwan shipped 976,000 units in the year's first quarter, a 36 percent gain over sales of 719,000 for the same period for the year before. Likewise, Taiwan shipped 1,022,000 units in the second quarter, a 12 percent improvement on shipments of 913,000 for the second quarter of 1996.

Shipments in the second half are expected to reach 2.7 million, for a yearly total of 4.7 million, predicted Taiwan's Market Intelligence Center. Taiwanese manufacturers shipped 3.78 million units in 1996. If the projections hold out, it will amount to a 24 percent increase.

The gains followed the industry's upward trend over the past three years, according to Nikkei.

More than 90 percent of the notebooks that come from Taiwan never carry a Taiwanese name, according to a report in the online edition of Nikkei Business Publications.

Instead, the island's wares are made for U.S. and Japanese manufacturers, who then put their own name on the computers. The list of manufacturers includes Acer, First International Computer, GVC Corporation, Quanta Computer, Dual Technology, Twinhead, and Chicony Electronics. Of this group, only Acer produces its own line of notebooks (as well as models for Texas Instruments).

"That's where the [Taiwanese] magic is," said Gerry Purdy, chief executive officer of Mobile Insights, a Mountain View, California-based consulting group. "This is Taiwan's second coming, on an 'OEM' basis through the majors." OEM is industry parlance for original equipment manufacturer.

Taiwanese manufacturers earlier had tried to market under their own brands. The effort, however, failed.

Despite these gains, market forces conspired to keep the Taiwanese from achieving the larger goals needed to catch up with rivals from Japan.

In the first half of 1997, resellers built large inventories and then had to cut prices to clear their shelves. Reduced sales revenues meant resellers purchased fewer models than had been expected, which worked to hold back growth in production volume, Nikkei reported.

Production in the first two quarter of 1997 also remained below levels from the fourth quarter of 1996, meaning notebook manufacturers have not enjoyed a continuous, quarter-on-quarter growth.

Taiwanese manufacturers were further influenced by the yen's depreciation, as Japanese firms were able to resist pressure to shift production overseas to lower costs.