A Win-Win Deal

DQI Bureau
New Update


PC plant buy out may not prop href="">Foxconn.

However, it is highly possible that Dell will raise its outsourcing to

Foxconn in the long run. The acquisition of Dell’s PC plant

located in Lodz, Poland by the Taiwan-based Foxconn Electronics, of Hon

Hai Precision Industry, is not likely to help increase considerably

Foxconn’s shipments of notebook in the short-term as the

plant’s notebook production is very small. However, it is

highly possible that Dell will raise its outsourcing to Foxconn in the

long run, sources from notebook makers have said. Once the transfer of

ownership is finalied, it will effectively become a customer of

Foxconn's manufactirng services in Lodz, according to Dell.

Dell has transfered ownership of its manufacturing operation in Lodz to
Foxconn. Following the transfer, Dell will become a Foxconn customer,

sourcing its desktop, notebooks, servers and storage systems for EMEA

customers from the Lodz factory. According to Dell the move will help

make the company more efficient by simplifying its global operations.

All jobs at the facility should remain intact with Dell employees

continuing in their roles when Foxconn takes the reigns. Dell will keep

its sales and marketing office in Warsaw.

The in-house notebook production lines of Dell are located mainly at
its plants in Malaysia. Dell’s plant in Poland chiefly makes

desktops, and the volume of notebook production there is very small.

Hence, according to sources from notebook makers, the acquisition of

Dell’s PC-making plant in Lodz is bound to benefit directly

Foxconn’s shipments and sales of desktops.

According to these sources, Foxconn at present suffers from a lack of a
strong R&D team, and buying a plant that only manufactures PCs

and not having an R&D establishment is not going to benefit

Foxconn much, the sources added. Also, the acquisition of

Dell’s plant in Lodz is unlikely to have any effect on

Foxconn’s existing outsourcing plans for first-tier notebook

makers for 2010 since the company’s orders come from

Dell’s in-house production, industry analysts said.

At present, the notebook clients of Foxconn include Dell, Apple, Sony,
and HP. In 2009, Foxconn reportedly shipped 3 million-4 million

notebooks. Foxconn’s forecast for shipments of notebooks for

2010 is 6 million units. Foxconn, incidentally was designing the Adamo

series of ultra-thin notebooks for Dell.

The sale is the latest in a series of moves that Dell has made to
reduce manufacturing costs as it looks to maintain pace with rivals

that already outsource all or the majority of their hardware assembly,

such as HP and Acer. Earlier this year, Dell announced plans to migrate

all EMEA PC assembly from Limerick in Ireland to its Polish facility

and third-party manufacturing partners. Contract manufacturing is

thought to be less expensive than assembling partially-assembled

components in Dell-owned plants, particularly when the components are

made by contract manufacturers in the first place.