Compal Electronics has reduced its notebook shipment forecast for 2011 from 48 million units originally to 42 million units, while its shipment forecast for LCD TVs has also dropped from eight million units to 6.5 million units, according to company president Ray Chen.

However, Chen expects Compal's notebook shipments will grow 20% on year in 2012.

Of the six million notebooks in the reduction, five million units are netbooks, Chen added.

Market watchers pointed out that Compal's notebook orders from Dell and Lenovo will increase significantly in 2012, while Compal will remain as the major notebook supplier of Acer. Compal's tablet PC orders in 2012 are also expected to grow 30-50% from three million units in 2011 to 3.9-4.5 million units.

Compal announced consolidated revenues of NT$176.37 billion (US$6.08 billion) for the second quarter, up 3% on quarter, but down 22% on year, with gross margin at 4.9%, net profits NT$3.17 billion, and EPS NT$0.75.

Compal CFO Gary Lu pointed out that 2011 is a difficult year in terms of the global economy, and some of its clients are facing difficulties. Increasing labor costs in China, rising Taiwan exchange rates, and competition from fellow makers are all seriously impacting the company's profitability, despite that some electronics manufacturing service (EMS) providers have already quit the market. In addition, the increase in R&D spending to develop different platforms is also increasing the company's overall costs.

Compal is already set to increase its R&D staff from 350 members to 1,000 by the end of 2011. Although the decision will create pressure on operating profits in the short term, it will significantly increase the company's competitiveness in the market over the long term.

Source:digitimes