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Asustek’s Reformation Plans Remain Vague.

Category: Other

by Anton Shilov

[ 03/30/2007 | 08:46 AM ]

Asustek Computer may find itself in a difficult situation in several quarters as partners for whom the company manufactures various devices request the company to spin-off its contract notebook manufacturing unit from the rest of the company. Even though Asustek does have plans to split own-brand and original equipment manufacturing (OEM) businesses and go public, its partners may force it to make actual decisions faster.

Companies like Apple, Dell, Sony and Toshiba have historically ordered Asustek Computer’s fully-owned subsidiary Asusalpha to manufacture their notebook computers. However, sales of Asus’ own-brand laptops have been improving greatly in the past few years and the company started to compete against its own clients.

The reason why Asustek’s notebook manufacturing is so successful is because the firm enjoys great economies of scale due to manufacturing of a lot of laptops, mainboards and other electronics devices. Certainly, economies of scale greatly help Asustek’s own-brand notebook business. That said, Dell has pressured Apple to spin-off its own-brand notebook manufacturing into a separate company by Q1 2008, otherwise future orders from the company may be in question, reports DigiTimes web-site.

Back in late 2005 it was reported that Asustek’s own-brand operation was expected to turn into a new independent company, which would set up a headquarters in Singapore and would aim for listing on the New York Stock Exchange (NYSE) in the future. The parent company would concentrate solely on manufacturing of hardware and components for various partners, including suppliers like Apple, Dell, Sony, Toshiba as well as for the company that would manage Asus-branded products.

Currently it is unclear what has happened to the plan that was reported almost one and a half year ago, but it clear that Asustek has to separate its businesses somehow so to avoid any conflicts of interest.

None officials of the companies mentioned commented on the news-story.