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Asustek break-up to pursue profits

Asustek break-up to pursue profits

A familiar name in computer motherboards, Asustek Computer will split into three companies by January to separate its name brand product business from its contract manufacturing operations, it said on Monday.

"We think this will boost our competitiveness in each area," said Jonney Shih, chairman of Asustek, at a news conference in Taipei.

The announcement comes after months of speculation over such a move and years after some rivals in Taiwan first undertook similar changes to avoid conflicts of interest with customers. A number of Taiwanese companies produce IT hardware for huge overseas customers such as Hewlett-Packard, Sony Computer Entertainment and Apple, in addition to their own-brand products.

Acer, the world's third-largest PC maker, was a pioneer in spinning off manufacturing operations in Taiwan. Several years ago the company divided itself in three, using the Acer name for its branded PC business, while spinning off its main contract manufacturing arm into a company called Wistron and its mobile phone and monitor business into Benq. As part of the division, Wistron had to compete against other contract manufacturers for orders from Acer. Some people feared the contract manufacturing business might wither and die without the Acer orders, but instead Wistron has secured some high profile business including Xbox 360 game console orders from Microsoft.

Asustek's name brand business will continue to operate under the same name, while its PC-related manufacturing operations will become Unihan Technology. Asustek's casing, modules and non-PC contract manufacturing business will become Pegatron Technology.

Asustek sells goods ranging from motherboards and graphics cards to laptop PCs and smartphones under a few names, including its popular Asus brand.

The split will take place on January 1, 2008, Asustek said.


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