Taiwan To Play Bigger Role In Compaq s Supply Chain
Story Filed: Tuesday, March 16, 1999 6:43 PM EST
Mar 16, 1999 (Tech Web - CMP via COMTEX) -- Continuing its massive shopping spree in
Taiwan, Compaq said it plans to boost its total procurement of locally made computer products
and components from $5.5 billion in 1998 to $7 billion in 1999.
The Houston-based PC giant also plans to set up a new and unique supply-chain management
research center in Taiwan to provide technical assistance for local contract electronic manufacturers
(CEMs) and component suppliers.
Called the Manufacturing Competence Center, Compaq's new site in Taipei will play a key role in
strengthening its ties with local suppliers while also boosting the company's own, burgeoning
build-to-order (BTO) PC strategy.
"We expected to [realize] $50 billion in revenue in the year 2000," said Greg Petsch, senior vice
president for global manufacturing at Compaq, at a media event in Taipei. "Taiwan is a very
important part of our supply chain to achieve that lofty goal."
Compaq is under pressure to solidify its BTO strategy to compete more aggressively against direct
PC sellers, such as Dell, Gateway, and more recent entrants in the direct game, including
Hewlett-Packard and IBM.
Dell, HP, IBM, and other major OEMs are also stepping up their procurement plans in Taiwan this
year.
For years, foreign OEMs have flocked to Taiwan for good reason: The island's in total is the world's
largest (and usually least expensive) supplier of LAN cards, modems, monitors, motherboards,
notebooks, power supplies, scanners, and other PC-related products, according to the
government-sponsored Market Intelligence Center, in Taipei.
Taiwan, the world's third-largest supplier of computer products, next to the United States and
Japan, will produce $34 billion worth of computer products this year, up 12 percent over 1998,
Market Intelligence Center said.
To reduce its own PC costs, Compaq in the early 1990s set up an international procurement
operation in Taipei to find cheap sources of supply on the island. Today, in fact, Compaq is the
largest foreign buyer of Taiwan-made PC products and components, including connectors, desktop
and notebook computers, peripherals, as well as some new and surprising items.
For example, Compaq for the first time ever will start buying DRAM chips from undisclosed Taiwan
suppliers this year, Petsch said. Compaq, which sources its DRAM chips from Japanese, Korean,
and U.S. suppliers, will procure 64-megabit DRAM devices built around the PC 133 specification
from local suppliers, he added.
On the PC side, Compaq said it plans to outsource 70 percent to 75 percent of its low-end to
midrange notebook PCs from Taiwanese vendors in 1999, compared with nearly 65 percent in
1998. For some time, Compaq has procured notebooks from two Taipei-based concerns, Inventec
and Arima.
The U.S. computer giant also procures a large percentage of its desktop PCs from two of its
long-time CEMs, First International Computer and Mitac.
To assist its Taiwan-based CEMs in the future, Compaq will set up its Manufacturing Competence
Center this May, according to Rosemary Ho, managing director of Compaq Computer Taiwan, in
Taipei.
The center, to cost around $30 million, will bring Taiwan-based suppliers up to speed in the areas of
enterprise resource planning, product-design management, and supply-chain management, Ho
added. |
