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Economic, scale challenges for Pegatron notebook business

Notebook ODM / EMS is still Pegatron’s core business, and it is estimated that notebooks will contribute to 40% of Pegatron sales in FY11.

There is talk No. 4 ranked (2010 EMS/ODM rankings) ODM Pegatron is to be a major notebook player. A recent report from Asia highlights the worldwide top 10 PC / notebook by market share. Notebook OEMs are broken down into three categories as below:

Tier-1: HP, Lenovo, Dell, Acer

Tier-2: ASUSTeK, Toshiba, Apple, Samsung

Tier-3: Sony, Fujitsu

 

The report leans toward Pegatron’s (No. 4 ranked ODM, 2010) desire to becoming a tier-1 notebook provider for OEMs. But, without gaining orders from tier-1 notebook OEMs (see above) and, while 60% of Pegatron’s notebook shipments are for ASUSTeK (plus FY12 notebook shipments for Toshiba), the report by Fubon Research states Pegatron still faces economic challenges associated with scale and the related difficulty of achieving management’s 2% operating margin target. (See rankings: Top 10 EMS / ODM companies)

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The report also points to Pegatron’s low capacity utilization rate due to lacking a tier-1 notebook customer for ODM notebook orders. Additionally, from the report are highlights for the worldwide top 10 PC / notebook producers by market ranking.

 

Figure 1: PC (notebook / desktop) shipments 2010, and 2011

PC (notebook / desktop) shipments 2010, and 2011

 

Figure 2: Notebook shipments 2010, and 2011

Notebook shipments 2010, and 2011

 

For 2012 notebook orders, Fubon believes QuantaCompal and Wistron have obtained major or secondary allocations from tier-1 notebook OEMs.

HP’s 2012 order allocation will be lead by Quanta, followed by lower volumnes by Inventec, then Wistron, and Compal.

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Dell’s 2012 order allocation is expected to be lead by Compal, followed by Wistron, then Quanta.

Lenovo’s 2012 order allocation is expected to also be lead by Compal, then Wistron followed by Quanta.

 

Pegatron global operations

Pegatron global operations




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