Dell to outsource more to China, Taiwan and India companies
By Bernard Lo and Mark Lee Bloomberg
June 8, 2007, 12:00 am TWN
Dell Inc., the world’s second largest maker of personal computers, said it will outsource more manufacturing to companies in Asia to cut costs and accelerate the introduction of new models.
“We will be utilizing a lot of partners” in China, Taiwan and India, Steve Felice, president of Dell’s Asia operations, said in an interview in Hong Kong yesterday, without identifying companies. “You will see us outsourcing more components to the supply chain.”
Dell widened its range of computers to boost sales to consumers, reducing the company’s dependence on business clients after it lost the market-leading position to Hewlett Packard Co., Felice said. The Round-Rock, Texas-based said last month it will cut about 10 percent of its workforce to bolster profit.
“There will be more regional focus in North America, Europe and Asia, to meet the customer requirements,” Felice said. Giving more orders to Asian manufacturers will also help Dell “remain cost effective,” he said.
Hon Hai Precision Industry Co., the world’s largest maker of electronics for other companies, has won orders from Dell to make desktop computers, Taiwan’s Economic Daily News reported on June 5. Hon Hai will start shipments to Dell from 2008, the newspaper said.
Dell, which derives most of its revenue from customer orders placed on phones and the Internet, may offer more products in retail stores in China. Felice said. The company said in May that it will offer desktop PCs at shops operated by Wal-Mart Stores Inc. in the North American market.
“You will see Dell in retail in China soon,” Felice said, without elaborating. The company is also expanding marketing efforts in smaller Chinese cities to business customers, he said.
Dell reported last month it had profit of US$759 million, or 34 cents a share, in the three months to May 4, topping an estimate of 27 cents in a Bloomberg survey. Fiscal first-quarter sales were US$14.6 billion.
The company said on May 31 it will cut about 8,800 jobs, out of a total of about 88,100 full and part-time workers.
Dell’s share of global PC sales fell to 15.2 percent in the first three months of this year, compared with 18.2 percent a year earlier, market researcher IDC said on April 18. Hewlett Packard increased its market share to 19.1 percent from 16.5 percent in the quarter, IDC said.