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To: Jeter C. Hall who wrote (104934)	2/25/1999 11:51:00 AM
From: Mohan Marette	Respond to of 176387

<Industry news>Compaq, IBM, Hewlett,Dell-Top Buyers of Taiwan IT Products Taipei, Feb. 25 (Bloomberg) -- Compaq Computer Corp. was the largest buyer of Taiwan information technology equipment last year with more than $5 billion in purchases, helping make U.S. companies by far the top customers for Taiwan. International Business Machines Corp., Hewlett-Packard Co. and Dell Computer Corp. came next, spending between $1.5 billion and $2.5 billion each, the Ministry of Economic Affairs said. Major U.S. buyers purchased more than $13.3 billion of Taiwan technology hardware last year, a 46 percent increase from the previous year. The scale of U.S. purchases helps explain how Taiwan's economy -- where exports account for two-fifths of economic output -- boasted a 4.8 percent growth rate last year even as many of its Asian neighbors were mired in recession. Taiwan manufacturers have captured increasing order flow ''through greater emphasis on research and development, innovation, product quality, and manufacturing and distribution efficiency,'' said Minister Wang Chih-kang, and by trying to develop ''very close partnerships with global IT companies.'' Last week, Motorola Inc. said it was establishing a manufacturing alliance with Taiwan Semiconductor Manufacturing Co. as part of a strategy to out-source more of its production to focused semiconductor manufacturers -- known as ''foundries'' -- such as TSMC. Notebook computer maker Quanta Computer Inc. carried out Taiwan's most successful initial share sale of 1998, partly on the strength of its relationships with Dell and Gateway 2000 Inc., which accounted for more than 80 percent of its orders last year. Competition Taiwan is the world's third largest producer of information technology products, behind the United States and Japan, the ministry said. Its companies last year produced $19 billion worth of information technology hardware onshore and another $13 billion offshore -- an 8.4 percent increase from 1997. Following the U.S., major Japanese buyers purchased $1.5 billion worth of information technology products from Taiwan last year, a 22 percent decline. Major European companies were the third-largest buyers, with $1.3 billion spent, a 75 percent increase from the previous year. To be sure, it has not all been easy going. South Korean manufacturers, for one, have been undercutting Taiwan companies as the won weakened more than the New Taiwan dollar during the past 16 months. Prices for many electronics products, particularly memory chips, have also been falling amid global over-capacity. That's compressed profit margins at some Taiwan manufacturers. Winbond Electronics Corp., for example, which makes computer memory chips, lost NT$396 million ($12 million) last year, blaming falling Asian demand and tough competition. The mixed news of rising sales but thinning margins played out in stock prices: the benchmark electronics share sub-index ended last year almost unchanged from where it started, even as the broad TWSE Index slumped 22 percent. Still, Taiwan could boast that it was the biggest producer of 10 major computer components, including scanners, modems and monitors. Among U.S. buyers, Apple Computer Inc. and Gateway 2000 were also prominent; both procured between $500 million and $1.5 billion worth of Taiwan hardware.