02.08.2001
New Motorola contract for Acer Communication

• Acer Communication (2352 'Ming Ji') has received a new outsourcing contract from Motorola's Europe division. With a quantity of around 2m unit, shipment is expected to start in Mar. 2001. It is possible that this contract will be a stepping stone for Acer Communication into the European market. The company at present produces handsets for the Asian region only.

• Acer Communication expects monthly production to increase to 400k unit from Mar., up from the current 150-200k unit per month.

• Motorola predicted in Jan. that global 2G demand will see nil growth for the rest of 2001. We believe that handset production would come in lower than Acer's expectations.

• The new contract price for GSM has fallen to around US$90 per unit, less than the previous contract which brought in a price of over US$100. Despite this fall, we expect further falls in the price of raw materials. Consequently, we believe that Acer will maintain its gross profit margin at the 12% level.

BennyLo@Primasia.com +886-[0]2-2547-8869