Compaq to pull PC production from Mitac

Compaq will no longer outsource desktop PC production to Mitac, industry sources have claimed, but will instead contract Taiwan's FIC and Foxconn to build its desktops.

The deal with Mitac was set to be terminated this past Saturday, according to a DigiTimes report posted on Friday.

The move calls into question the future of Mitac's Californian assembly plant. The majority of the facility's output ends up in Compaq warehouses.

Mitac will continue to produce notebook and server systems for the Big Q. The company told DigiTimes that its California plant will not close, but will stay open to service the company's other customers. With Compaq taking most of the PCs the plant produces, Mitac must find new customers or face the prospect of scaling back the plant's workforce. With the PC market slowing down so much, it's hard to see Mitac having much luck with the former option.

Foxconn already produces basic systems for Compaq. FIC is expected to pick up where Mitac leaves off, shifting production to Taiwan and eventually perhaps Eastern Europe too. ®

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DigiTimes: Compaq terminates desktop orders to Mitac