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Asustek splits to divide and conquer

Major reorganisation planned for January

Asustek Computer is to split into three companies by January to separate its name brand product business from its contract manufacturing operations.

"We think this will boost our competitiveness in each area," said Johnny Shih, chairman of Asustek, at a news conference in Taipei.

The announcement comes after months of speculation over such a move and years after some rivals in Taiwan first undertook similar changes to avoid conflicts of interest with customers. A number of companies on the island produce IT hardware for huge overseas customers such as HP, Sony and Apple, in addition to their own-brand products.

Acer, the world's third-largest PC maker, was a pioneer in spinning off manufacturing operations in Taiwan. Several years ago the company divided itself in three, using the Acer name for its branded PC business, while spinning off its main contract manufacturing arm into a company called Wistron and its mobile phone and monitor business into BenQ. As part of the division, Wistron had to compete against other contract manufacturers for orders from Acer. Some people feared the contract manufacturing business might wither and die without the Acer orders, but instead Wistron has steamed ahead, capturing high profile business including Xbox 360 game console orders from Microsoft.

Asustek's name brand business will continue to operate under the same name, while its PC-related manufacturing operations will become Unihan Technology Corp. Asustek's casing, modules and non-PC contract manufacturing business will become Pegatron Technology Corp.

Asustek sells goods ranging from motherboards and graphics cards to laptop PCs and smartphones under a few names, including its popular Asus brand. The company is also well-known for quality. When Sony went looking for a manufacturer for the PlayStation 3, it tapped Asustek to kick start production and then later added its old partner, Hon Hai Precision Industry.

The split will take place on January 1, 2008, Asustek said.


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