It was only a matter of time before Asustek Computer would start to outsource production of its computers and components to its former rivals after spinning off the contract manufacturing business into a standalone company. According to market rumours, the time has come and Asustek has initiated work with Foxconn and Flextronics.

Taiwan-based Economic Daily News news-paper (which article was partly translated by DigiTimes web-site) has reported that Asustek Computer recently began to outsource production of its desktops and laptops to its former rivals – Foxconn Electronics as well as Flextronics. It is likely that Asus needed to initiate partnerships with its former competitors in order to cut costs and broaden lineup of its branded devices.

Foxconn will reportedly begin production of Asustek’s notebooks in 2009 with the initial aim of manufacturing more than 10% of Asus notebook shipments. Flextronics is likely to make desktops for Asustek.

Early this year Asustek Computer spun off its contract manufacturing business into Pegatron and Unihan companies in a bid to concentrate on development and selling of Asus-branded devices. The company was expected to outsource parts of its production to third parties in order to enjoy better flexibility and lower costs where possible. Nevertheless, it is still a surprise that Asustek decided to turn to one of its major rivals, Foxconn.

Asustek, according to reports, declined to comment on the market rumours.

Tags: Asustek, Foxconn, Flextronics