New business emerging at ODM Wistron, and recycling getting traction

By Staff

Wistron has hired around 1,000 R&D engineers since mid-2010, preparing for its new businesses, including tablet PC, cloud computing and recycling. Wistron notebook growth to exceed growth at Compal and Quanta.

Wistron is the world’s third-largest notebook PC ODM company with a market share of 14-15% in 2010. The company was earlier the design and manufacturing service (DMS) division of Acer Inc, and was spun-off in 2001 as an independent company.

Notebook shipment growth
In a recent report, Royal Bank of Scotland forecasts Wistron’s notebook shipments will rise 14% year-on-year in 2011, higher growth than at the other Taiwanese notebook ODMs the bank covers, Compal and Quanta.

The drivers will be orders from Lenovo and Sony, while substantial orders from Acer and Dell will continue to flow in. Although Wistron is Acer’s second-largest notebook supplier, its exposure to Acer’s Aspire One notebook production is limited, says sources.

R&D engineers
Of the 1,000 newly hired R&D engineers, 500 are for Android OS development, 400 for cloud computing and 100 for Wistron’s recycling business, with most of the investment dedicated to new products according to sources citing figures from Wistron.

These sources indicate this is the right direction for Wistron to reduce its dependence on the notebook business.

LCD-TV business
Wistron says it aims to ship over 10 million LCD-TV units in 2011 and Wistron added LG and Sharp as new customers. Wistron’s LCD-TV shipments saw strong growth in 1Q11 of 30% quarter-on-quarter to 1.7 million units. The ramp-up of Wistron’s new European TV plant in the Czech Republic is also on track says sources.

It is believed Wistron will ship 10 million smartphone units in 2011, becoming RIM’s largest system partner by the end of the year. Wistron has said it is also approaching some other smartphone vendors for orders. See below for information on Wistron’s revenue mix by product for fiscal year 2011.


Wistron revenue mix by product for fiscal year 2011


Recycling business
The contribution to Wistron group sales is just 3-4% but the contribution to operating profit is 7-8%. Construction of the Wistron’s second recycling center in China is due to finish in 3Q11 says sources. Wistron has an ecosystem joint ventures with local governments for recycling. Meanwhile, China’s 12th Five-Year Plan seems positive for Wistron’s recycling business.

Cloud computing and server business
Wistron says it expects its server business sales to grow 30% annually over the next three years. Customers currently include IBM, Acer and HP.

On the cloud- computing side, Wistron is working with some healthcare centers in China (such as PLA General Hospital which is in more than 10 cities) to deploy its procurement and logistics systems.

If this plan goes well, Wistron could extend the cooperation to other cities in China, say sources. Currently, the server business contributes 4% of Wistron’s total sales.

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