Quanta Computer has reportedly cut back production lines for RIM's PlayBook at its factory in northern Taiwan due to a large decrease in orders and has offered preferential compensation to lay off about 1,000 workers, according to industry sources.

In response, Quanta confirmed the layoffs but declined to comment on clients and orders.

RIM, in order to avoid imitations of the PlayBook by China-based white-box vendors, asked Quanta to undertake production Taiwan instead of at Quanta's factories in China, the sources indicated. Therefore, Quanta set up production lines at the factory in northern Taiwan specifically for PlayBook and began production in three shifts with a workforce of more than 2,000 staff, the sources said.

In April, RIM forecast sales of 4-5 million PlayBooks in 2011, the sources noted. However, RIM shipped fewer than 800,000 units during the first half of 2011 and monthly shipments dropped to about 100,000 units in the third quarter, the sources said. In view of drastically shrinking ODM orders from RIM, Quanta quickly decided to downsize its production to minimize losses, although RIM has not indicated plans to withdraw from the tablet PC market, the sources explained.

Quanta's preferential compensation is significantly higher than legally required, averaging NT$100,000 (US$3,420) per worker, the sources noted.

Source:digitimes