Taiwan’s Quanta moves into cloud computing

Taiwan’s Quanta, the world’s biggest contract PC maker, made more than 50m notebook computers last year and, for the first time in its 23-year history, generated revenues of more than T$1,000bn ($35bn).
But like many other electronics contract manufacturers, Quanta is in a quandary. Rising labour costs in China, rising raw material and oil prices, and a weakening US dollar, are all squeezing profit margins, such that Quanta last year had just T$2.3bn in net profits for a 1.7 per cent margin.Other contract manufacturers are in a similar bind.

Taiwan’s Hon Hai, an assembler of Apple products, saw its margins fall to a historic low of 2.6 per cent on an unconsolidated basis in the first quarter of 2011, as costs increased due to its wage increase last year and as it moves factories further inland in China.

Compal, the world number two PC manufacturer, last month said it would seek to raise the fee it charges PC brands such as HP and Dell to offset rising costs.

Yet moving to lower cost regions and trying to raise prices, may only be temporary fixes. For Quanta, even though it correctly predicted a decade ago that notebook computers would replace desktops, the longer-term solution lies in identifying the “next big thing”, which it thinks is cloud computing. 

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