updated 11:50 am EDT, Tue October 5, 2010
Taiwanese computer makers refuse HP's orders
Notebook suppliers in Taiwan said no to HP's requests to produce low-profit orders, a Tuesday report claimed today. A Goldman Sachs analyst said Compal, Quanta and Wistron had turned down production of 2011 models as the gross margins were too thin to be acceptable. Quanta would also reduce its investment in Chongqing in mainland China, Digitimes also confirmed.
Quanta said the scaling back was due to client demand and that investments hadn't been delayed. It didn't comment on the broader orders.
The overall move by the three suppliers would end strong competition between them since the start of 2010. While Quanta will have less shipments next year, it will post higher profits. Flextronics accepted HP's low-gross margin orders for prices lower than Quanta's, the report added.
It's unclear what the effect would be on HP, though the three companies combined produce a significant portion of computers for the industry. HP may have to either turn to other suppliers or else agree to raise margins. It and other Windows PC makers have increasingly centered their attentions on very low-cost PCs where the base price offers little profit or is even a loss leader where upgrades create profits.