Asustek Computer continues to lower OEM orders to Pegatron Technology and has shifted some graphics card OEM orders to Elitegroup Computer Systems (ECS), according to market sources. Asustek has also lowered the outsourced proportion of motherboards to Pegatron to below 50%, down from 50-60% of Asustek's total motherboard shipments, sources from motherboard players noted.
Asustek has also released some of its notebook and netbook orders to Foxconn Electronics (Hon Hai Precision Industry) and Quanta Computer, while its all-in-one PCs are also outsourced to a non-Pegatron player.
With the outsourced proportion falling below 50%, Pegatron is expected to ship only about 10 million motherboards to Asustek in 2010.
Due to ECS offering lower-than-standard quotes to gain graphics card orders from Asustek, the sources believe that the company is mainly aiming to expand its economic scale and is turning its focus back on the OEM business as its brand business is not performing as well as expected.
The sources also noted that the reason Asustek is willing to outsource its graphics card orders to ECS despite their relationship as competitors in the branded business is because ECS' brand business is not a threat to Asustek, while ECS' low manufacturing quotes can significantly improve its gross margin.
However, Asustek's decision may generate concerns among consumers about quality since ECS is known for mainly producing entry-level products.
Although losing orders to ECS, Pegatron has successfully gained several motherboard orders from China's local system integrators, which originally outsourced their orders to ECS; meanwhile Pegatron is also working aggressively to grab orders from ECS' existing clients and is expected to become the fourth largest notebook maker worldwide in 2011.
Article translated by Joseph Tsai
