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The Laptop Trail

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The Laptop Trail
The Modern PC Is a Model Of Hyper-efficient Production And Geopolitical Sensitivities
By JASON DEAN and PUI-WING TAM, THE WALL STREET JOURNAL, June 9, 2005
When a customer in the U.S. clicks on Hewlett-Packard Co. 's Web site to purchase one of its Pavilion zd8000 laptop computers, the order quickly arrives thousands of miles away at a factory in China run by a less-familiar name, Quanta Computer Inc.
Although virtually unknown to consumers, Quanta is the world 's biggest maker of laptops. As part of a sometimes-difficult symbiosis, the Taiwanese company makes roughly one-quarter of the world 's portable computers, which are then sold by brands such as H-P and Dell Inc. Quanta collects components from countries around …show more content…

Quanta made nearly a quarter of the roughly 49 million notebooks shipped last year -- a share the company expects to grow to a third this year. Including smaller rivals like Compal Electronics Inc., Inventec Corp. and Wistron Corp., Taiwanese concerns now produce as much as 80% of the world 's laptops.
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Outsourcing to low-cost, high-quality Taiwanese manufacturers has helped make Dell and H-P the world 's top two PC companies in terms of sales. International Business Machines Corp., which outsourced less than half of its laptop production, according to Merrill Lynch, and operated its own factory in China, consistently lost money on its PCs. It sold the business this year to China 's Lenovo Group Ltd., which has used Taiwanese companies to make most of its notebooks in China.
But the relationship between U.S. computer firms and their third-party manufacturers can be tricky. In the struggle to retain an element of control over their suppliers, H-P, Dell and others play contract manufacturers against each other to keep prices falling and ensure no supplier gains too much leverage.
Roger Bahalla, director of H-P 's laptop supply-chain strategy, says H-P typically works with a half-dozen third-party manufacturers at any one time. "It 's a way to keep the business competitive," says Mr. Bahalla, who adds that 98% of H-P 's notebooks are made in China. "There 's an optimal number of partners to deal with. We don 't want any one

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