09.05.2001
Asustek strong partner in HP-Compaq deal

• Development: Hewlett Packard (HP) purchased Compaq for US$25bn in stock. Local outsourcing partners of HP hit the 7% up-limit yesterday, including Asustek, which accounts for 10% of the US firm’s sales.

• Analysis: The deal could accelerate the PC price downtrend and pressure gross profit margin on PC-related products. The buy side position for both HP and Compaq is now stronger than ever.

• Primasia View: We view Asustek as Taiwan’s most competitive MB outsourcer. The company is also upping capacity expansion in China. We recommend Outperform.