Quanta Computer has recently started to negotiate with its largest client Hewlett-Packard (HP) about its new profit-preservation strategy and the company may abandon some notebook orders with low-gross margins to keep its profitability; however, the new strategy is expected to impact 3-5 million units of Quanta's shipments in 2011, according to industry sources.

Quanta was unable to comment before the time of publication and normally does not comment on specific orders or clients.

Due to the raising exchange rate of the NT dollar plus increasing labor costs in China, while EMS providers are competing for orders over price as well, and HP usually asks for lower quotes than most of other brand vendors, several of HP's partners, in addition to Quanta, have decided to negotiate to raise quotes, the sources noted.

Quanta originally aimed to ship 60 million notebooks in 2011, but the new strategy may cause the company to fail to achieve the goal; however, the company is expected to see gross margins increase for the year.