Quanta’s dilemmas and issues in companies that offshore to it

Quanta was started in 1988 by Barry Lam and C.C. Leung and was located in Taipei, Taiwan. “Lam’s vision was to design and develop notebook computers.” (1) However at this time the desktop computer industry was growing due to the fact that Taiwanese manufactures quickly captured global market shares in computer components such as keyboards, computer mice and computer monitors. (2) This made it easy for Quanta to get into these manufacturing companies at a low price. During this time firms such as Dell, IBM, HP and Apple were undergoing fierce competition and were looking to offshore their expensive manufacturing from the United States to somewhere else. This is when they started to outsource assembly and design to Quanta; in 2008 the main customers of Quanta were HP, Dell, Apple, Acer and Lenovo. (3) By 2011, Quanta manufactured all 13.4 million of Apple’s laptop computers that were shipped for that year. (4) And Quanta had a 35% worldwide market share of notebook computers.

The main issues that Quanta had with all of the companies that offshored to it were primarily tied to competition. Price competition was very intense in Taiwan because of all these companies trying to cut costs that margins for profit were being consistently lowered. Quanta took a different approach and “focused more on the design-intensive work to escape the low-margin trap becoming an early leader among Taiwan’s ODM firms.” (5) This led Quanta to focus on design to put together notebook computers that were more streamlined and able to achieve some significant design wins.

However even though they were able to gain some significant profits from doing this there were still issues with costs. So to combat these costs in 2001-2001 Quanta moved much of its assembly operation to China. This was putting even more pressure on their