Acer pulls plugs on Siemens PC deal

Siemens outsourcing plans for its PC business came under a cloud today, as Acer pulled the plugs on a deal to buy the German company's Augsburg PC manufacturing plant. The two companies agreed in April that Siemens would turn over most of its PC manufacturing to Acer, and that Acer would centre its European development and production on the plant. Acer's decision now to back out of the purchase raises questions over the future of both the plant and Siemens' PC business. According to a statement issued by Acer today, the company intends to concentrate investment on its semiconductor manufacturing, and because of the crises in Asia and Russia (where German companies are heavily exposed) is taking a cautious view of investment planning. Under the original deal Acer had agreed to buy the plant for an undisclosed price, and to retain 2,000 of the 2,450 employees. The plant has a capacity of 1.4 million PCs a year, and is probably a headache Siemens can do without. Both Siemens and Acer have been hit badly by the fall in semiconductor prices, and it seems likely that the collapse of the deal now was caused by arguments over pricing, funding and projected production levels. ®