Yen Ting Chen, Taipei; Emily Chuang, DIGITIMES [Friday 2 November 2007]
To stay competitive, Compal Electronics is preparing to shift production to Vietnam from China, company president Ray Chen said during a recent investors conference. Compal will not expand its notebook plant in China in the future.
In August, Compal made plans to invest US$30 million to build a notebook plant in Vietnam and expects the move will help spread shipment risk and save costs, said Ray.
Ray pointed out that with new labor laws in China to come into effect in January 2008, average salaries will increase 10-20% sequentially. This will directly increase the company's overall production costs, Ray noted. In addition, there will be a serious shortage of labor at major notebook bases in eastern China such as Shanghai, Suzhou and Kunshan in 2008 as global shipments of notebooks are expected to grow 20-22% sequentially, Ray explained.
Compal plans to establish a notebook plant in Hanoi, Vietnam, and plans to kick off production in the first quarter of 2009, according to sources. Shipments in the first year should be able to achieve five million units, said the sources.
Already more than ten component makers are planning to set up bases in Vietnam, said Ray, adding that the supply chain is set to be firmly established.
Amid the shortage of notebook batteries, shipments of Compal's notebooks in the fourth quarter will be below expectations. However, the company will nevertheless see a 10% sequential growth this quarter, added Ray. Compal still stands a good chance of achieving its annual goal of 23 million units this year, he pointed out.
Potential OEM customers of Compal include Apple, Asustek, Sony and Fujitsu. Compal is seeking further partnerships with its customers and expects to add at least one new customer next year. In 2008, the company aims to deliver 30 million units, Ray projected.
For its LCD TV deployment, Ray said that with more than two customers next year, the company aims to ship one million units. The company only shipped 80,000 LCD TVs in the first three quarters of 2007. Total shipments this year may reach 120,000 units helped by orders from Toshiba in the fourth quarter, according to sources.
Compal president Ray Chen
Photo: CJ Liu, Digitimes
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