MiTAC, FIC, Hon Hai boost orders with JDM

Tina Liao, Special to The China Post

As Dell Computer stays on course to meet profit projections, its suppliers in Taiwan, including MiTAC International Corp., Hon Hai Precision Industries, and First International Computer Inc. (FIC) are introducing the “Joint Design Manufacturing” (JDM) business model in order to get orders from their international business partners. In a bid to work more closely with foreign customers, MiTAC has established JDM R&D Centers in both the United States and Japan; FIC and Hon Hai have also set up JDM centers in different parts of the world to take orders from the new HP, Sony, and other Japanese corporate customers.

Hsu Jien, a top official of FIC, stated that FIC is expected to become an OEM partner of the new HP offering desktop PCs to that company. FIC and HP have strengthened their cooperation by working together under the JDM business model. With a strong ODM R&D capability, FIC was able to secure roughly half of the OEM orders HP plans for the year. Out of HP’s total order of 4 million to 5 million desktop PCs next year, FIC anticipates providing 2 million to 2.5 million units thanks to the strengthened relationship.

The new HP is expected to book orders with Taiwan’s suppliers over the next few months. In order to cope with the restructured HP, FIC is close to finishing the merger of its business units, which in the past catered their services to HP and Compaq separately. FIC top officials said they would make an all out effort to get orders from the new HP.

In addition to FIC, MiTAC and Hon Hai have also established JDM R&D Centers throughout the world to build up closer relationships with their customers, as well as to jump start joint product development.

Currently MiTAC is the major desktop PC OEM supplier for Dell, while Hon Hai supplies semi-finished PC systems and PC motherboards to Dell. As Dell’s profits met expectations, most are generally optimistic about the business outlook for MiTAC and Hon Hai in the second half of this year. MiTAC set up a JDM R&D Center in the United States last year, and is planning to expand the scale of its JDM operation in preparation for tackling the Japanese market. MiTAC is expected to engage in a JDM partnership with NEC, to which it now supplies desktop PCs and Pocket PCs. In addition to its main R&D Center in Taiwan, Hon Hai has been setting up other R&D centers in United States, Europe, mainland China, and Japan. Being close geographically to the clients is one of Hon Hai’s major secrets for getting their orders.

Besides R&D in the IT fields, Hon Hai also made substantial investments in advanced nanotechnology, opto-electronic products, and PS3 in cooperation with Sony.