Aaron Lee, Taipei; Joseph Tsai

 

Taiwan-based ODMs are expected to face significant pressure from Lenovo's plan of establishing production bases in Japan and South America, according to sources from the upstream supply chain.

The sources pointed out that Lenovo has a completely different strategy over production than other brand vendors. Compared to most of the brand vendors that outsource all their products to ODMs to save cost, Lenovo is considering to copy its successful business model of having in-house production lines, which allows the company to have stronger control over its product shipments, customization and quality, from desktop PC business to notebook business.

Although the upstream supply chain of notebook is currently still dominated by Taiwan makers, with some China-based players such as BYD gradually penetrating into the component industry and are even advancing to assembly business, Taiwan-based ODMs and component makers have already raised their alarm and are monitoring these players carefully.