May 13, 2014 8:20 pm JST

Quanta's Q1 net profit up, PC shipments to stay flat in 2014

DEBBY WU, Nikkei staff writer

TAIPEI -- Taiwan's Quanta Computer, one of the world's largest contract notebook manufacturers, said Tuesday its first-quarter net profit rose on the year while its PC shipments for all of 2014 are expected to stay the same as last year.

     Company executives added that Quanta is trying to focus more on cloud hardware and mobile gadgets, including tablets and wearable devices.

     Quanta's net profit was 4.6 billion New Taiwan dollars ($138 million), a year-on-year rise of 5%, with revenue totaling NT$215.8 billion, a 9% growth from the previous year. The company shipped 10.5 million notebook PCs in the first quarter.

     "We expect to ship about the same quantity of notebooks this year as last year," Quanta Vice Chairman C.C. Leung told reporters Tuesday. "We are hoping our non-notebook products will account for a higher proportion of our revenue this year, up from 35% last year," he added, referring to his company's cloud server and mobile device products.

     The Taiwanese PC maker has been struggling in a shrinking notebook market. Last year, the company shipped 43.1 million notebooks, down 20% from 2012, and its net profit dropped 19% year on year.

     To combat the weakening demand for notebooks, Quanta has aggressively sought to branch out into mobile devices. However, with fierce competition from Chinese manufacturers, Quanta was unable to fulfill its goal of shipping 20 million tablets in 2013.

     Local media has reported that Quanta has secured an order to assemble Apple's upcoming iWatch device. While not confirming the report, Leung said the company has been devoted to developing wearable devices over the past few years and that it began producing smart watches last year.

     Quanta has seen some success with cloud hardware, bypassing big-name companies and providing data center servers directly to Facebook and Google. However, it is now facing new challenges in the sector.

     Foxconn and HP announced in April a joint venture to deliver low-priced servers to big data centers owned by Web hosts and social media companies. Quanta executives did not respond directly to the new competition but said they expect that they will generate even more revenue from cloud hardware in the second half of this year than in the first half.