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High Notebook Demand Prompts Compal to Raise Target Shipment

Higher-than-expected notebook demand causes shifts in production forecasts

Nov 25, 2009 14:32 GMT  ·  By
Compal is an IT enterprise with plenty of customer-service branches in Taiwan, China, Brazil, the U.S. and Poland
   Compal is an IT enterprise with plenty of customer-service branches in Taiwan, China, Brazil, the U.S. and Poland

Although Compal had predicted its projected on-quarter notebook shipment growth at around 10%, low notebook inventory levels prompted vendors to place in more orders for Q4 2009. With this new development, Compal expects to reach a total sales amount (for the whole year) of between 37 and 38 million units. This means a jump from the previously predicted 10% growth to 20%.

"Client inventories are looking very low; there's the Windows 7 effect, and demand seems to be quite strong right now," Compal Chief Financial Officer Gary Lu said. "The existing forecast seems to be on the low side and that's why we're revising it upward," Lu added.

Company President Ray Chen explained that the increased demand would greatly help revenues and might actually prompt such an increase in shipments so as to establish new on-month growth records. Still, there are certain difficulties that Compal is currently facing, namely certain shortages in supplies, such as passive components, small ICs, DRAM and specific size panels.

The company is, according to Chen, arduously working on procuring more supplies so as to avoid its notebook shipments from being affected. Even so, however, the company president predicts a panel shortage in 2010's second quarter, although, according to him, it is around the same time that Compal should start reaping the benefits of Chen's joining the board of directors of Chunghwa Picture Tubes.

Compal's new notebook-shipment forecast exceeds the previous estimate of 36.5 million units but, according to Chen, this will not affect the predicted 5-10% on-quarter drop for the first quarter of 2010 and 20% on-year increase for the whole year of 2010. Compal runs a chassis join venture with Ju teng International, a venture that is expected to have a monthly capacity of 900,000 to one million plastic chassis by December. As a result of these developments, Compal's shares have gone up by 2%.

As a side note, Compal's more notable rival, Quanta, also saw an upwards forecast revision of its own, with shipments now expected to fall five percent, compared with the previous 10%.