Compaq bankrolls Taiwan's PC biz

Tough deals keep cash flowing

OEM business Compaq has brokered with a multitude of Taiwanese component suppliers will surpass $10 billion this year, according to a senior executive based on the island.

And the components not only include monitors, but cover the whole gamut of parts for PCs, signalling a determination by Compaq to push into the mainland Chinese market.

According to reports from the island, Compaq spent over $9 billion sourcing components from Taiwanese firms last year, signalling that while the firm is expressing caution about the PCs in the domestic US market, it is still prepared to continue its current supply chain strategy.

Taiwanese firms produce notebooks for a number of large, branded PC companies, but Compaq has committed more to this market than the other big names.

For example, local firm Inventec makes the Compaq Armada range and Arima makes Presario notebooks. The firm also has relationships with Quanta.

FIC and Mitac make some Compaq desktops, while CTX handles a bundle of its flat screen and CRT monitor business.

The reports add that Compaq is currently in negotiations with Taiwanese companies to make iPaq devices.

As we reported last year, Compaq has streamlined its OEM business in Taiwan. Because it spends so much money in the local marketplace, it is able to strike deals with the Taiwanese OEMs that would have made them shudder only a few years ago - but at least keep their factories and their cash flows moving.

As Taiwan's standard of living has risen, many of the firms now have plants on mainland China, where monthly salaries in the PC factories are much less than on the relatively prosperous island. The Taiwanese government, too, is now more relaxed about companies building facilities on the mainland. ®

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